Taiwan must look beyond Korea to draw up its economic road map
Erik Tollefson says obsessive comparison with Korea, exaggerated by the K-pop fever, is unhelpful
Latent economic anxiety typically manifests itself in strange ways. The broadcast of the Korean television drama, My Love from the Star, which tells of an alien who came to earth and fell in love with an actress, is a case in point.
The television series has besieged Taiwan: from fans obsessively commenting on the internet to newspapers debating the pathology of Taiwan's K-pop obsession, the show's popularity has struck an existential chord.
Indeed, the raucous debate has in a way intruded into the policy realm: at a recent Legislative Yuan hearing, National Development Council minister Kuan Chung-ming was asked about Taiwan's economic position in Asia and to expand on his previous comments that Taiwan had fallen behind Asian competitors, including Korea.
In truth, while Taiwan's policy focus on addressing economic challenges is warranted, continued reliance on historical economic comparisons, particularly with Korea, are likely to be counterproductive.
Korea and Taiwan have traditionally been classified as two of the four "tiger" economies of Asia, alongside Hong Kong and Singapore. They emerged on the global scene in the 1970s and 1980s on the back of explosive, export-based growth. The results were impressive: from 1965 to 1980, Korea's and Taiwan's economies grew, on average, at around 10 per cent per year.
The high rates of growth, however, camouflaged how their economic development models differed. The South Korean government played an aggressive role not only in strategically selecting industries to compete in, but also aggregating capital (both human and financial) in the country's chaebols (conglomerates) through foreign borrowing. Although the government also played a strategic role in Taiwan, it was less heavy-handed; economic development was financed domestically, while small and medium-sized enterprises served as the main engine of growth.
The 1997 Asian financial crisis served as a key differentiator between the models: while Korea's dependence on high levels of foreign debt precipitated a national crisis, Taiwan weathered the storm relatively unscathed.