South Korean President Moon Jae-in announced on the 7th that South Korea's per capita income has exceeded $30,000 USD. The International Monetary Fund (IMF) estimates South Korea's per capita income will continue climbing this year, surpassing $32,000 USD, making South Korea the 7th country globally to join the "30-50 Club" — a nation with a population of 50 million and per capita income of $30,000 USD, simultaneously reaching the threshold of a "developed" country.
Ten years ago, Taiwan's former President Ma Ying-jeou put forward the "633" campaign promise during the 2008 election:
- Average annual economic growth rate of 6%.
- Unemployment rate reduced to below 3%.
- Average national per capita income reaching $30,000 USD by 2016.
This third policy never materialized as planned. Now in 2018, after a full decade, Taiwan's per capita income stands at only $25,000 USD. Not only has the target gone unmet, but Taiwan has been surpassed by South Korea. According to Lai Wei-jen, a deputy research fellow at the Gold Training Institute, "When President Ma first took office, the country was actually in a higher economic position, but after the financial tsunami, the domestic economy faced significant decline, which was the main reason why the 633 campaign promise became difficult to implement."
Looking back to the 1970s, Taiwan's annual economic growth rate reached 9.7%, surpassing South Korea, Hong Kong, and Singapore, ranking first among Asia's Four Tigers. However, by 2004, export volume was surpassed by Singapore, and in 2005, GDP was overtaken by South Korea. From then on, Taiwan became the last among Asia's Four Tigers. South Korea not only achieved $30,000 USD per capita income but also achieved a record high export trade volume of "$600 billion," revealing that Taiwan faces an economic crisis on the international stage. The main reason is that although Taiwan has signed Free Trade Agreements (FTAs) with New Zealand, Singapore, and other countries, the coverage rate is only 10% — meaning these countries account for only 10% of Taiwan's exports. Even with reduced tariffs and zero tariffs, the practical benefits are limited. In contrast, South Korea has signed FTAs with China, ASEAN, the EU, and the United States — Taiwan's four main export markets — with a coverage rate as high as 70%, creating a significant gap.
What is the impact of FTAs? South Korean products exported to FTA-signatory countries enjoy duty-free treatment, while Taiwan's exports lack such advantages. It's as if Taiwan-manufactured products cannot compete in quality and are more expensive, resulting in insufficient sales and consequently affecting the economy. This is why signing FTAs is so important. However, experts analyze that Taiwan's economy isn't necessarily bad; rather, Taiwan is at a disadvantage in its overall economic structure. According to Chiu Ta-sheng, deputy director of the Taiwan Institute of Economic Research, Taiwan has always been primarily based on small and medium-sized enterprises, engaged in intermediate product manufacturing and contract work. It's not that Taiwan's economic development has been poor in recent years, but because of its different nature and different role in the supply chain, South Korea's per capita income differential with Taiwan has gradually widened.
Over the past thirty years, South Korea has pursued economies of scale. Companies like Samsung, LG, and Hyundai Motor are multinational brands. Additionally, with a population of 50 million, South Korea has advantages in brand development and high added value. Taiwan, however, follows a supply chain assembly model with limited added value, and is vulnerable to fluctuations in international markets. With only 23 million people, Taiwan's domestic market is small, brands struggle to survive, and its unique political situation makes it difficult for the economy and international status to make major breakthroughs.
