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Monday, September 07, 2015

FDI and Taiwan

In her rambling manifesto (see post below), KMT presidential candidate Hung Hsiu-chu says Taiwan needs to be a better foreign direct investment (FDI) environment. Above data show FDI for Taiwan from 2006 to the present (source). If Hung plans to follow Ma policies for attracting FDI, then we'll have the same success we've had for the last seven years. As I noted two years ago, much of that FDI isn't really FDI -- it comes from the Carribean, Hong Kong, and Samoa. Probably much of it is recycled local money posing as "foreign money", and another big chunk is from China. This site notes that greenfield investments have fallen the last three years....
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1 comment:

  1. econobotSeptember 9, 2015 at 10:39 PM

    The economic realignment towards China these past 8 years is starting to show very poor timing these last 2. The next downturn is going to show a decoupling with China's huge investment bubble popping (you can only invest for so long while people aren't actually buying more) and commodities producers (Australia, Brazil, South Africa, etc) crashing with it; on the other hand, the US (some commodities via oil, but not core), India (lower prices are a huge boon and lacks infrastructure which will now be very cheap to buy) will do much better as growth accelerates in both places.

    Taiwan after 8 years is setup much less to be able to benefit from a growing US and a crashing China as it was in the past. It's also constrained in being able to appropriately raise its currency (and pay appropriate wages to the whole island) while being tied to China and exports and going through a downturn. But it's an opportunity post the next election to renew stronger economic ties with US and build new ones with India and finally have a balanced, sustainable growth.

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