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Industry Structure
An examination of the structural breakdown of Taiwan's GDP in Graph
2 reveals that since the 1970s, there has been a rapid departure
from the agricultural sector towards the services and industry sectors.
The restructuring of the Taiwanese economy has progressed through
several planned stages. The first stage concentrated on agriculture;
the second stage concentrated on the adoption of import substitution
policies; the third stage concentrated on export expansion; and
finally, the fourth stage transformed the economy to dependence
on heavy industry. In preference to relying on agriculture, Taiwan
now lays heavy emphasis on high-tech, capital intensive industries.
Graph 2
Sectoral Share of
Taiwan's GDP (%)
Note: Figures are calculated as a percentage of
GDP. Source: ADB, Asian Development Outlook 1991, Table A6.
Consequently, agriculture has declined from almost 40% of GDP in
the early 1950s to just over 4% in 1989. In contrast, the industrial
sector has risen from 18% to just over 45%. Private investment has
been a major contributor to economic growth since the 1960s, with
small and medium-sized enterprises contributing the greatest proportion.
This contrasts with South Korea and Japan, where large-scale conglomerates
have been the major contributors to domestic investment.
Increases in Taiwan's demand for agricultural goods will occur
as Taiwan's living standards rise and agriculture becomes less important
in the constitution of Taiwan's GDP. This will lead to Taiwan becoming
an increasingly important market for exporters of agricultural products.
Although the industrial and services sectors now dwarf Taiwan's
agricultural sector, agriculture remains a vital part of Taiwan's
economy especially outside the major cities.
The government still supports agriculture because of its strategic
importance in maintaining the economy and feeding the people in
emergencies. This support has taken the form of lowering the tax
rate for farmers, as well as continued government purchases of surplus
rice. Agriculture in Taiwan is still very efficient, as increased
mechanisation, improvements in efficiency and research into newer
strains of agriculture - such as aquaculture - have all kept agriculture
productive and a source of foreign revenue.
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