Title: Taiwan investment in mainland China and its impact on Taiwan economy
Abstract: The examination of Taiwan foreign direct investment (FDI) in the Mainland reveals that most FDI has been undertaken by labour intensive export-oriented small and medium enterprises (SMEs). These firms rushed into the Mainland because their competitiveness in Taiwan are restricted by rising labour cost, appreciated currency, ascended land cost, environmental regulations, labour shortage and labour standards law. Common language and culture background along with immense domestic market, the Mainland is one of the best destinations for Taiwan FDI. Taiwan investments in the Mainland possess both positive impacts and negative impacts on the Taiwan Economy. Positive impacted included an enlarged trade surplus with the Mainland and upgrading domestic industries. Negative impacts involved high reliance on the Mainland, de-industrialization in Taiwan economy, competition in the export markets, income inequity and inflationary pressure on Taiwan non-tradable sector. Evidences from quantifying the cost and benefit effect suggests trade effects with the Mainland has outweighed the loss of domestic production in Taiwan caused by Taiwanese investments in the Mainland. Taiwan FDI in the Mainland upgraded Taiwan domestic industries rather than giving rise to deindustrialization. With a small share of their exports in common, competition between Taiwan and the Mainland in major markets appears to be insignificant. Investments in the Mainland look as though they have only a minor impact on the income distribution and non-tradable sector in Taiwan. Growing dependence on the Mainland market seems to be the only concern for the increasing Taiwan investment in the Mainland for the Taiwan government.
Publication Year: 1998
Publication Date: 1998-01-01
Language: en
Type: dissertation
Indexed In: ['crossref']
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