June 30, 2004
A recent United Nations Conference on Trade and Development (UNCATD) report on the role of government policy on industrial competitiveness, claiming that globalization and liberalization are not sufficient to guarantee successful economic development, but that proper government industrial policy is also required, states that the four Asian Tigers (Taiwan, Hong Kong, South Korea and Singapore) are the most successful examples of pairing globalization with government policy. The report by the UN organization goes on to state that Taiwan has possibly developed the world's most advanced technological system for the support of small and medium enterprises.
The report maintains that the results of globalization and industrialization are not balanced. It says Asia's newly emerging and developing nations have reaped the greatest benefits, while South and Central American nations, which adopted a greater degree of liberalization, have seen their economies grow at a slower pace.
The report suggests that "selective and functional" intervention by governments in the industrial and technological development of emerging economies plays a major role in economic development.
Raising the example of Taiwan, the report points out that Taiwan's industrial policy includes import protection, financing, the option of overseas direct investment, support for the development of domestic techniques and technology, and the vigorous expansion of exports.
However, in noting that the policies of newly emerging and developing nations are not all the same, the UNCTAD report points out that Taiwan, unlike Korea, did not promote the development of large private industrial conglomerates and did not emphasize the development of heavy industry.
Confronting the barriers small and medium enterprises face in the process of developing technology, Taiwan succeeded by facilitating research and development cooperation, encouraging innovation and providing various forms of support to industry.
The report describes how Taiwan, in the early stages of its industrial development, attracted foreign investment for weak industries and employed various methods to ensure that multinational corporations transferred technology to Taiwanese companies. According to the report, Taiwan's government played an active role in helping small and medium enterprises seek out, purchase, promote and adapt to foreign technologies.
The UNCTAD report goes further to state that, when necessary, governments need to participate in joint investment plans in more complicated high technology sectors such as semiconductors and aeronautics. The report concludes that economies do not automatically reach the goals of liberalization and industrialization and that the intervention of government policy is a necessary counterpart. The experiences of Taiwan and the other Asian Tigers may be studied to determine the proper degree of government intervention. (CNA)
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