Saturday, March 10, 2007

Taiwan FDI Surge

A friend forwarded this interesting tidbit:

What on earth is happening in Taiwan? The attached chart shows Taiwan FDI trends as reported in the official balance of payments: the blue line is FDI inflows (i.e., foreign FDI into the Taiwan economy), the red line is FDI outflows (i.e., Taiwanese investing abroad) and the green bars show the resulting net position. As you can see, ever since the opening of China in the late 1980s Taiwan has recorded a steady, consistent negative position, as outward investment has always exceeded foreign appetite for FDI in Taiwan.

Until now, that is. Suddenly, in the second half of the 2006 the numbers show a massive increase in FDI inflows - and in the fourth quarter of the year Taiwan recorded its first signficant net positive FDI balance in two decades.

I'm not going to speculate why this might be happening. But if it is sustained, it will be very good for the DPP and for the island's citizens. The chart and info come from UBS.


Anonymous said...

If we take FDI to be "smarter" than local money (and, well, foreign finance generally is), that means Taiwanese are way too pessimistic about their own economy and are in this period, selling too cheaply to foreign funds.

Anonymous said...

Foreign investors want to take advantage of the new fangled video console makers and demand for notebooks with Vista Installed. Digital/electronic goods look like a good sector to be in now.

Boyd Jones said...

It could just be a blip. Outlier. Or perhaps it is Mainland money sneaking into Taiwan (wild speculation - but I know firsthand that Mainlanders dream about investing in Taiwan).