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- GDP (PPP):
- $929.5 billion
- 2.1% growth
- 3.3% 5-year compound annual growth
- $39,767 per capita
- Inflation (CPI):
- FDI Inflow:
Taiwan’s economic freedom score is 75.1, making its economy the 14th freest in the 2015 Index. Its score is up by 1.2 points from last year, with improvements in seven of the 10 economic freedoms led by investment freedom, the control of government spending, and labor freedom. Taiwan is ranked 5th out of 42 economies in the Asia–Pacific region, and its overall score is well above the world average.
Prudent macroeconomic policy within a stable legal and monetary environment has been the key to rising levels of economic freedom over the past five years. Commitment to structural reforms and openness to global commerce have enabled Taiwan to advance far into the “mostly free” category. Recording uninterrupted years of growth in economic freedom since 2009, Taiwan has achieved its highest score ever in the 2015 Index.
Taiwan’s export-driven, dynamic economy benefits from a well-functioning legal framework and a tradition of private-sector entrepreneurship. The efficient business environment is facilitated by a competitively low corporate tax rate and the elimination of minimum capital requirements for incorporating a company. Despite progress, however, a relatively high level of perceived corruption and a rigid labor market still restrain Taiwan’s overall economic freedom.
Taiwan is a dynamic multi-party democracy, and its economy is one of the richest in Asia. President Ma Ying-jeou, re-elected in 2012 on a platform that promised economic revitalization, has relaxed cross-Strait barriers with the People’s Republic of China and negotiated a multi-stage formal economic agreement with Beijing. Taiwan is excluded from membership in the United Nations, other international organizations, and a variety of free trade arrangements as part of Beijing’s efforts to pressure it into unification. Although internal opposition to engaging with China is considerable because of fears that sovereignty will be lost, recent economic arrangements bind the island much closer to the PRC. The government’s possible ratification of a Trade in Services Agreement with China is controversial.
Though less pervasive than in the past, connections remain between politics and big business, and corruption is still a problem. In June 2014, a senior local official was indicted for accepting bribes from a construction company. The judiciary is independent, and the court system is free of political interference. Property rights are generally protected, and the judiciary enforces contracts effectively.
Taiwan’s top individual income tax rate is 40 percent, and its top corporate tax rate is 17 percent. Other taxes include a value-added tax and a tax on interest. The overall tax burden is equal to 8.7 percent of domestic income. Government spending amounts to 20.7 percent of the domestic economy, and public debt equals 41 percent of gross domestic product.
With no minimum capital required, it takes three procedures to incorporate a company. Bankruptcy proceedings are straightforward. However, completing licensing requirements remains relatively time-consuming. Labor mobility is impeded in the rigid labor market. Prices are market-determined for the most part, but the government does influence some prices and controls prices for electricity and pharmaceutical products.
The average tariff rate is 1.8 percent. Tariff-rate quotas restrict many agricultural imports. The government screens new investments. Investment in some sectors is restricted. The evolving financial sector provides a wide range of financial instruments and services, and the state has stepped back from its previously dominant role. Liberalization has progressed, but the foreign bank presence remains relatively small.