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Will Taiwan Be Marginalized by China?

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  • Tain-Jy Chen

    (Department of Economics National Taiwan University 21 Hsu-Chow Road Taipei 100 Taiwan and Chung-Hua Institution for Economic Research 21 Hsu-Chow Road Taipei100 Taiwan)

Abstract

This paper shows that Taiwan has benefited immensely from China's accession to the World Trade Organization, in terms of the expansion of its exports to China, owing to Taiwan's institutional and structural advantages. Behind the rapid expansion of trade and investment, however, Taiwan runs a high risk of hollowing out its domestic industries, a risk that is manifested in a decline in exports, a loss of control over logistics functions that serve the export industry, and the relocation of research and development activities to China. Taiwan is facing an uphill battle of keeping its capital- and knowledge-intensive industries at home while attempting to take advantage of low-cost Chinese labor to retain its position in the world market. Copyright (c) 2003 Center for International Development and the Massachusetts Institute of Technology.

Suggested Citation

  • Tain-Jy Chen, 2003. "Will Taiwan Be Marginalized by China?," Asian Economic Papers, MIT Press, vol. 2(2), pages 78-97.
    • Handle: RePEc:tpr:asiaec:v:2:y:2003:i:2:p:78-97
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    Cited by:

    1. Yuqing Xing, 2008. "FDI in China: Facts and Impacts on China and the World Economy," Working Papers EMS_2008_03, Research Institute, International University of Japan.
    2. Hui-Lin Lin & Yi-Chi Hsiao & Eric S. Lin, 2015. "Do different types of FDI strategies spur productivity and innovation capability growth? Evidence from Taiwanese manufacturing firms," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 16(3), pages 599-620, June.
    3. Huang, Shu-Chin, 2013. "Capital outflow and R&D investment in the parent firm," Research Policy, Elsevier, vol. 42(1), pages 245-260.
    4. Yeh, Kuo-chun & Ho, Tai-kuang, 2010. "Will Japan, Taiwan or the US be isolated by China? A macroeconomic game approach," Japan and the World Economy, Elsevier, vol. 22(1), pages 59-68, January.
    5. Yeh Kuo-chun, 2009. "Will a Taiwan-China Monetary Union be Feasible? Lessons from Europe," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 14(3), pages 1-36, March.

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