Discuss the following comment with at least 4 paraghaps: \" The Evolution of Tai

Question

Discuss the following comment with at least 4 paraghaps:

"The Evolution of Taiwan's International Trade

Mercantilism is a trade theory that is characterized by continuous government intervention in the international exchange and balance of trade, Taiwan has experienced necessary changes in its political and economic aspects.

From the year 1895 to the year 1945, Taiwan, which was formerly a province of China was taken away by Japan. At the time of the capture, Taiwan depended mostly on the export of agricultural products such as sugarcane, tea, and rice, and had no primary manufactured product. To avoid over-reliance on farm export, Japan provided support to Taiwan in the form of expertise and finance to help modernize trade in the newly acquired territory. Thus, Taiwan improved its agricultural production to feed the farm sector in Japan.

Later in 1945 towards the end of World War II China re-acquired Taiwan from Japan. Due to government restructuring, Taiwan lost its agricultural market in Japan and experienced challenges such as inflation, food shortage, and unemployment of its residents. The difficulties encountered by Taiwan in 1945 made Chinese government intervene and employ action to balance trade in Taiwan. The balance of trade would remain best achieved through increased exports and reduction of imported goods. For instance, the Chinese government restricted importation of radios but allowed the importation of radio parts to enable local assembly and increase export products from Taiwan into China.

From 1958, Taiwan has seen an expansion of its exports. The Chinese government employed policies to reduce over-reliance on production for the local market to increase the number of goods exported to countries like China, and Japan. Taiwan depreciated its currency, they lowered the taxes on imported materials, and the government established export processing zones. Thus, countries such as Japan and the United States invested in Taiwan enjoying its low-cost labor. It is an excellent example of Neomercantilism Theory, which seeks economic welfare.

In the year 1969, Taiwan based in the Porter's National Competitive Advantage Theory, which explains the competitiveness of a country in specific industries. Taiwan created "The Big Then Constructions." It was focused to improve six transportation projects (a freeway, railroad, railroad electrification, two harbor developments, and an international airport), and four projects in big industries (steel, shipbuilding, petrochemical, and nuclear power). These projects helped to reduce the foreign dependence on parts and components to produce finished goods; also it helped to create around 146.000 jobs; finally, it facilitated the creation of small and medium business.

From 1981, Taiwan took the Global Strategic Rivalry Theory, which is focused on the obstacles that a country or firm may face in a new industry or market. The government agreed on a policy called "Liberalization and Globalization," thus, the primary goal of this policy was to increase the competition and open the importation to new economies. Besides, the government liberated the finance field creating private banking institutions; it helped to regulate the interest rate and foreign currency control.

In 1990, Taiwan increased the investment and trade with China. Its economy improved with the use of technology and high wage rates requiring new employment relationships such as Outsourcing and Offshoring in the assembly operations. Taiwanese companies made investments in the Chinese assembly operations, some of their the moved their machinery and equipment to China. In this way, China became Taiwan's direct investment and export market. Thus, Taiwan used the Factor Mobility Theory, which is the ability to move factors of production (land, labor, or capital) of one production process into another.

Although the United States remains a significant market for Taiwan exported goods, its trade policies do not favor production companies from the United States. Therefore, as a manager in US Company doing business with Taiwan, I would not agree with the trade policies. The reason behind this is that Taiwan would never build a substantial market for goods from other countries as imports are restricted, and production in Taiwan fulfills both the local and international market."

Explanation / Answer

International trade is a factor of the economic development of nations and evolution of international trade meanings the changes and the development of the international trade over a period of time. Taiwan is a big example for the evolution of international trade. International trade has been rapidly grown in few past decades. It is often desired because it allows the country to develop, increase the economy and specializing in the production of the goods they are known for though export. Mercantilism is a theory of trade which means continuous intervention of government in the international exchange and balance of trade. Mercantilism is an economic policy used for maximize the trade of the nation. Taiwan is country which have experience many changes in its economic and political aspects.

Taiwan is now officially the republic of China. It is most populated and largest economy which is not a member of United Nations. From the year 1895 to 1945 is was a province of China which was taken away by Japan. At that time Taiwan was depended on the export of agricultural products and had no primary manufactured product. To avoid the reliance of Taiwan on farm export, Japan supported in the form of finance and expertise to make help in making growth in modernize trade. By this Taiwan improved its agricultural production. After the end of World War 2 China re-acquired Taiwan from Japan, because of this Taiwan lost its agricultural market in Japan. It was the worst situation for Taiwan it has to deal with the inflation, unemployment and food shortage. To control the situation China government took actions. Balance of trade is only possible when import is decreased and export is promoted.

From 1958, Taiwan exports were expanded. Taiwan lowered the tax on the imported material; depreciate its currency and government established export processing zones. During all this countries like US and Japan invested in Taiwan to enjoy its low cost labor, which result in economic welfare. Taiwan experience Neomercatilism theory and the Porter’s National Competitive Advantage Theory. Taiwan was developing day by day. It focuses on six transportation projects and four industrial projects. These projects help to generate employment for the residents and reduce foreign dependence. From 1981, Taiwan focuses on the Global Strategic Rivalry Theory. Government approved the policy of Liberalization and Globalization.

The government also liberates the finance field by creating private banking institutes which help in regulating foreign currency control and the interest rate. By 1990, Taiwan has increased the trade and investment with China. Taiwan now started using new technologies, outsourcing and off shoring the operations which result in improved economy. Taiwan’s direct export and investment market was China. It used the Factor Mobility Theory which helps in moving factor of productions. Still the US was the significant market of Taiwan imported goods. Taiwan fulfilled both the international and local market needs.

The above is the theories and the ways which shows The Evolution of Taiwan’s International Trade.

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.