Analysis On The Development And Competitiveness Of Service Sector In Taiwan

Service sector has become the pillar industry in Taiwan owing to the rapid development in the past 20 years. This thesis, under the guidance of historical materialism and dialectical materialism and based on the framework of relevant theories in industrial economics, fully explores and illuminates the developing track of the service sector in Taiwan after the 2^nd world war under the global context and against the backdrop of cross-strait cooperation in the service sector by comprehensively applying knowledge in political economics, regional economics, econometrics, statistics, etc., and resorting to numerous approaches in positive analysis, historical analysis, and comparative analysis, and so on, thereby forwarding the author's perspective on cross-strait cooperation in the service sector, the prospect of Taiwan's service industry and the roadmap to enhance Taiwan's competitiveness in the service sector.In so far as the developing trend of the current global service sector is concerned, it has evolved into the leading industry in the industrial structures. After a disappointing lopsided development in its service sector in the agriculture leading period, Taiwan established an export-oriented economic service system during the industry leading period, and gradually empowered itself as an economy with well-developed service sector. As a matter of fact, service sector in Taiwan fully conforms to the developing trends of the world. Superficially, in view of the service sector in USA, Japan, Singapore, South Korea, Hong Kong and Taiwan, Taiwan's ratio of service sector in the entire economy is higher than Japan and Singapore, who are evidently more developed than Taiwan in economy; and only lower than Hong Kong and USA. Nevertheless, an analysis into the developmental structures of the service sector and the knowledge intensive industry in Taiwan leads us to the conclusion that there lies imbalance between the service sector and its overall economic development, between the production volume of service sector and its employment ratio; and that Taiwan still lacks international competitiveness in its service sector as a result of the non-evident expansion of knowledge-intensive service in Taiwan's service sector. Investigations on a few critical economic factors that exert influences on the development of the service sector and the status quo of service trade in Taiwan lead us to the conclusion that the competitiveness of the service sector in Taiwan was not improved with rising importance of service sector in Taiwan's economy; but on the contrarary, has been increasingly weakened. This is because the rise of the service sector in Taiwan's economy was not rooted in the expansion of global market, but rather in its internal market. In fact, service market in Taiwan had been saturated, being mocked as "puffiness" and "bubble". It can be said that the rise of importance of service sector in Taiwan is mainly attributable to other shrinking sectors, which in sharp contrast gives undue prominence to the service sector. It is because of this that in the aftermath of 10-plus years of rapid development in the 1990s, service sector, once the major driving force in Taiwan's economic development, has started to drag and lag behind in Taiwan in recent years. This also justifies one of the reasons for the wane in Taiwan's economy.Service sector comprises over 70% in Taiwan's entire economy. If Taiwan intends to get out of its present economic dilemma for a higher level of performance, it can only resort to improving the competitiveness and value-added capacity of its service industry, thereby elevating service sector into the core competitiveness of Taiwan Economy and embracing the service economy era of a comparatively higher level. As far as the economic features and the geographical conditions in Taiwan are concerned, Hong Kong Pattern may be a valuable reference for Taiwan to elevate its competitiveness in its service sector, i.e. to forge Taiwan into a regional service hub with mainland China as its back-land. In other words, the prospect of the service sector in Taiwan relies, to a large extent, on expanding cross-strait cooperation, which not only ensures a massive market for Taiwan, but also makes it an attainable goal for Taiwan to develop into e a regional hub for service sector, given the respective advantages across Taiwan Straits are of great complementarities. Since the kickoff of cross-strait economic cooperation, the Chinese mainland has promulgated a series of favorable policies and measures in attracting investment from Taiwan and has produced positive results. In view of the characteristics of service sector in Taiwan, 2 favorable measures are hereby proposed for service businesses in Taiwan. Firstly, lowering the admittance conditions for Taiwanese business people in service sector to enter the market in mainland China with reference to CEPA; Secondly, taking effective measures to create favorable conditions for superior Taiwanese enterprises to investment in mainland' s service sector. It is an encouraging sign that cross-strait relationship has been undergoing proactive development and that the constraints on cross-strait cooperation on the service sector will be gradually lifted. With the in-depth development of economic cooperation across Taiwan Straits, Taiwan' s service sector will teem up with a bright prospect.