POLITICS: The Taiwan Economic Miracle – USSA News

Having written back in August about China being the least-successful ethnically Chinese country, I was interested to see this recent tweet.

Mr. Demos of Pnyx speculated that China would be as backward as India today if the communists has not prevailed in that nation’s civil war about 75 years ago.

To which Mikita responded that Taiwan’s economic success is evidence to the contrary. That’s where the KMT wound up after losing the war and Taiwan is now one of the world’s most-successful economies.

This has motivated me to take a closer look at Taiwan’s economic performance.

Back in 2014, I looked at per-capita GDP from Maddison and asserted that Taiwan is the success story, not China.

Since 11 years have passed, I went to the same database to show updated numbers.

Lo and behold, Taiwan has almost caught up to the United States.

To be fair, China has also enjoyed some strong growth since Beijing partially liberalized the economy late last century.

But Taiwan liberalized earlier and ranks much higher for economic freedom today

Here is the latest data on economic liberty in both jurisdictions from Economic Freedom of the World.

Needless to say, there’s a big gap between having the 7th-highest level of economic liberty and being mired at #108.

I suspect China’s per-capita GDP will struggle to reach $25,000 in the absence of further reform (in other words, caught in the middle-income trap). Taiwan, meanwhile, may very will pass the United States in the near future.

One very admirable feature of Taiwanese economic policy is that the burden of government spending is less than 20 percent of economic output, which is similar to Hong Kong and Singapore.

And it has enjoyed periods of significant spending restraint. I already noted significant spending restraint between 2001 and 2006.

The IMF data shows an even longer period of spending restraint between 2010 and 2019.

This qualifies Taiwan to be one of the few good examples of my 20th Theorem of Government (along with Greece from 2019-2025 and Netherlands from 2010-2017).

Taiwan has slipped a bit since 2019, but the burden of spending is still less than 18 percent of GDP, which is very impressive compared to other rich nations.

I’ll close by observing that all the “Asian Tigers” have had reasonably good pro-market policies. Taiwan is simply the least-appreciated member of that club.

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Image credit: Heeheemalu | CC BY-SA 4.0.