The Taiwanese Economy after the Elections: Takeaways for the European Union

Bruegel Senior Fellow Alicia García-Herrero provides an assessment of current state of the Taiwanese economy, how the election results will play into this, and where that leaves the European Union. Abstract follows below.

The results of Taiwan’s elections have confirmed that the ruling party, the Democratic and Progressive Party (DPP) remains the preferred option of voters, but with more checks and balances than during the past eight years, with the DPP losing control of Taiwan’s legistalative body. This implies that comprises will need to be reached, including on economic policies. Choices over the direction of the Taiwanese economy will need more consensus than before, including on the question of further economic diversification away from Mainland China, towards the US and the rest of Asia. The EU has not yet benefitted as much as the US, Japan or Southeast Asia from Taiwan’s diversification, neither in terms of exports nor in terms of attracting foreign direct investment (FDI) from Taiwan. Given Taiwan’s increasing importance as a foreign investor in high-end technology, the EU has an opportunity to strengthen its economic ties with Taiwan after the elections but the tool to do so will hardly be a trade or investment treaty since not even closer allies, such as the US or Japan, have finalized their trade/investment negotiations. The most obvious leverage for the EU is its position as largest foreign direct investor in Taiwan.

Download publication