Effects Of Trade Liberalization On Taiwan

China and Taiwan have built one of the most intertwined and important economic relationships in the world, and yet that relationship is not mutually open, compliant with World Trade Organization norms, or even fully institutionalized. What's more, despite massive trade and investment flows, the boundary between the two is a serious flashpoint for potential conflict. But leaders in Beijing and Taipei have committed to normalize and deepen their economic intercourse and open a new post-Cold War era in their relationship. While the political significance of this gambit has captured attention worldwide, the scope of opening intended and the bilateral, regional, and global effects likely to ensue are as yet poorly understood. This volume attempts to remedy that uncertainty with careful modeling combined with a qualitative assessment of the implications of the cross-strait economic opening now agreed in an Economic Cooperation Framework Agreement (ECFA). The study explores the implications for Taiwan and China, for their neighbors, and for the United States if this undertaking is fully implemented by 2020.

Taiwan has a special status for the United States, as both a leading high-technology economic partner and a place of political and security concern. The authors look at both the quantitative and qualitative evidence on the potential effects of a US-Taiwan free trade agreement (FTA), both for maximizing US economic benefits and for securing a prosperous and secure future for Taiwan. Their analysis indicates that the direct economic benefits of a prospective FTA would be modest and that the FTA could be most valuable to the United States if it leads Taiwan toward greater regional integration.

A collaborative effort by Western specialists and some of Taiwan's leading social scientists, this timely study addresses the cause and effects of Taiwan's dramatic achievements in economic growth and income distribution as a market-oriented yet highly government-interventionist economy. The relevance of this success could not be more telling for other market-oriented economies as well as for the rapidly decentralizing economies of Russia, Eastern Europe, and China. Using a case-study approach, the contributors examine the transition to export-led growth, foreign trade, investment patterns, the role of financial institutions, fiscal and monetary policy, the educational and agrarian systems, and the role of women and ideology.

This paper applies a computable general equilibrium model to investigate the potential economic effects of trade liberalization across the Taiwan Strait. Our simulation results reveal that cross-Strait trade liberalization will have significant positive impacts on external trade, domestic investment and real GDP for the economies in this area in general and in Taiwan in particular. Furthermore, the negative impact from the formation of a free trade arrangement between Taiwan and Chinese Mainland on Hong Kong seems to be rather small. These results suggest that cross-Strait trade liberalization is very likely to bring about a win-win situation for the economies in this area.

'. . . the book will be of great help to readers interested in Taiwan's economic performance over the past twenty years.' - Gilles Guiheux, The China Journal Taiwan's economic development experience represents a unique case study especially in the wake of the Asian financial crisis. Taiwan has performed outstandingly in terms of macroeconomic and industrial development, particularly during recent democratic and social change. This book aims to provide a broad picture of these institutional reforms and policy evolutions.