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Evaluation of the Relative Impact of Fiscal Incentives and Trade Policies on the Return to Manufacturing in Taiwan, 1955-1995

Author

Listed:
  • Glenn P.Jenkins

    (Department of Economics, Queen's University, Kingston, Canada and Eastern Mediterranean University, North Cyprus)

  • Chun-Yan Kuo

    (Department of Economics, Queen's University, Kingston, Ontario K7L 3N6, Canada)

Abstract

This paper examines the relative impact of tax incentives, trade policies, financial subsidy, real wage and real exchange rate on industrial investment and economic development over the past 40 years in Taiwan using an integrated cash flow model of industrial investment. The model is developed in such a manner that the movements of all the policy and microeconomics variables are allowed to interact with each other in the economy. The result show that trade and macroeconomic policies are much more important than income tax or subsidized finance policies for the successful industrialization in Taiwan. The effects of the tax incentives and financial policies are minor in comparison with the impact of the fundamental trends in the microeconomic variables, such as the movement of the real exchange rate and the real wage rate.

Suggested Citation

  • Glenn P.Jenkins & Chun-Yan Kuo, 1997. "Evaluation of the Relative Impact of Fiscal Incentives and Trade Policies on the Return to Manufacturing in Taiwan, 1955-1995," Development Discussion Papers 1997-02, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:4556
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    More about this item

    Keywords

    : Industrialization; trade Policies; financial subsidy; economic development; Taiwan;
    All these keywords.

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy

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