The new economy requires new ideas

Lung-chu Chen

In its six-year Challenge 2008 national development plan, the government states its objective of "fostering new ventures and encouraging innovation." The plan's main purpose is to grasp the core technologies of industrial development at the global level and maintain Taiwan's competitiveness in the face of fierce competition in the international market.

Enthusiasm for investment in China has led some of the nation's leaders to believe that Taiwan's economic potential lies in China. But to relax restraints on such investments before taking effective steps to safeguard the country's technological strengths and monitor the flow of capital will only further increase Taiwan's economic dependence on China. If the country loses its economic advantages, and with them the control that it currently exerts over its own economy, growing political dependence on China will seriously undermine Taiwan's security.

Many foreign scholars have warned that the "China fever" of Taiwanese investors has not diminished but increased. The lack of concern for national security that this seems to imply may well ultimately present Taiwan with the predicament of being economically dependent on China while striving for political independence from Beijing, placing the country unwittingly on the road to unification.

As for the solution to the delusions of those businesses that choose to migrate to China, the administration must adhere to the development concept of "global localization."

Taiwan should look to the high value-added sector by strengthening its companies' capacities for innovation, design, production and marketing, making Taiwan a strategic, global center for innovation and the production and distribution of high value-added products.

Because the nature of international market competition has changed, Taiwan must break away from traditional patterns of thinking and instead embrace an all-round mode of reasoning regarding industrial development. The accelerated pace of technological innovation has changed certain key factors of production, such as land and capital.

Taiwan has lost its competitive edge in terms of land and labor, but the nation's cumulative experience of innovation and technology remains instrumental to the maintenance of the nation's competitiveness. Taiwan should broaden the core of its industrial development and ensure that its industries become oriented towards innovativeness.

Chen Lung-chu is the current chairman of the Taiwan New Century Foundation.