The objectives of this report are 1) to identify the factors behind Taiwan's economic development and the problems currently confronted as a result of development; 2) to examine Taiwan's offshore investment in terms of its motivation; 3) to evaluate its impact on Taiwan, and 4) to provide an assessment for cOlmtries that interested in attracting Taiwan's investment.
The world has witnessed the rapid economic growth in Taiwan. The success could be attributed to a number of factors, such as pragmatic government policies, US. economic aid, effective control over inflation, Confucianism and entrepreneurial spirit .etc. However, the success also resulted the strengthened currency, rising production costs, etc. The relaxed control offoreign exchange offered Taiwanese entrepreneurs to invest abroad in order to survive from the fierce international competition. The confronted problems, on one hand, stagnated the further development of Taiwan's economy. On the other hand, they are also the forces that drive Taiwanese to adopt offshore investment in addition to international business activities.
Taiwanese have become the second largest investors in East & South East Asian countries after Japan since the early 1990s. Outward investment rose from US$41 million in 1985 to over US$I,660 million in 1993. According to available data on offshore investment, the bulk of investment was directed to the USA and the ASEAN countries. The same data show the emphasis of offshore investment was on banking and insurance and electronic and electric appliances. In practice, these data cover only a small fraction of total offshore investment. Taiwanese investment is also of considerable and growing significance in China, where it is concentrated in labour-intensive industries such as clothing, footwear, especially in Fujian and Guangdong Provinces. As a matter of fact, China could be the biggest recipient, as it accounts 33% of total Taiwanese offshore investment alone.
In terms of motivation, Taiwanese investment in American and European countries tend to be market-oriented investment.(Kojima's theory) The motive to invest to China and South-East Asian countries is more complicated. The investment to these region was initiated by labour-oriented motive and partly by resource-oriented motive. And then, the large domestic market of these countries attracted another more investment.
Outward investment has affected Taiwan's economy in many ways. Although it did not de-industrialize the island's economy, it affected the trade structure as well as the economic restructuring. However, the outward investment of Taiwan will continue to grow in the future. Investing industry is changing eventually as well as the investing destination. Different industry or even company will have different consideration while assessing where to invest.