January 31, 2005
Taiwan is the world's 27th freest economy, according to the 2005 Index of Economic Freedom jointly released by the Heritage Foundation and the Wall Street Journal in early January. Taiwan's score in this year's index places it seven notches higher than last year in the global ranking and earns it a rating as "mostly free," the index's second best category.
This index, published for the eleventh consecutive year this year, looks at the performance of 161 countries across 50 independent items that make up 10 general categories of economic freedom: trade policy, fiscal burden of government, government intervention in the economy, monetary policy, capital flows and foreign investment, banking and finance, wages and prices, property rights, regulation, and informal market activity.
In discussing Taiwan's performance, the index notes that Taiwan's economy has been one of the fastest growing since the 1960s, but that, as has happened to the other Asian Tigers, it has slowed down as it has matured. It also says that President Chen Shui-bian's reelection in 2004 has led to stronger popular consensus in support of economic reform.
The index highlighted a number of improvements in Taiwan over the last year. The relaxation of government regulations regarding foreign investment in the transportation, power supply, financial and telecommunications sectors succeeded in attracting more capital from overseas. Other legal revisions that reduced restrictions on mergers between financial institutions are steadily paying off, with Taiwan’s non-performing loans ratio falling to its lowest point since the Asian financial crisis of 1997. With the improving economic situation in the United States, Taiwan has maintained strong economic growth and has posted record-high trade figures. As of June 2004, the nation's foreign exchange reserves had expanded to
USD 229 billion and its unemployment rate had dropped to 4.36%, the lowest level in three years.
The index also pointed out that the U.S. Trade Representative stated in its Special 301 report in June 2004 that Taiwan has steadily improved its protection of intellectual property rights and has "successfully reduced" the pirating of optical media. The report also gives Taiwan credit for continuing to loosen restrictions on Taiwan businesses that trade and invest in China.
The annual index rates economies on a scale of one to five, with one the best and five the worst. Taiwan averaged 2.29 points in this year's index. Its scores in the ten general categories are: trade policy: 2.0; fiscal burden: 3.4; government intervention: 3.0; monetary policy: 1.0; foreign investment: 2.0; banking and finance: 2.0; wages and prices: 2.0; property rights: 2.0; regulation: 3.0; informal market: 2.5. While the ratings for fiscal burden and government intervention saw the biggest increases this year, rising 0.1 and 0.5 points respectively, Taiwan scored its largest advance in foreign investment, where its rating improved a whole point.
The top-ten economies in this year's index are in order Hongkong, Singapore, Luxembourg, Estonia, Ireland, New Zealand, United Kingdom, Denmark, Iceland and Australia.
(Central News Agency)
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