Economy of Taiwan

Taiwan has a highly developed free-market economy and is the 22nd-largest in the world by the value of all goods and services it produces. It also ranks 20th when considering the cost of living and other factors that affect purchasing power. Taiwan's economy is strong, with people enjoying a high standard of living, placing 8th worldwide when adjusting for purchasing power.

Historically, Taiwan exported goods like rice, sugar, and tea during times of Dutch and Qing rule, and later benefited from Japanese colonization with better infrastructure. After 1945, land reforms helped farmers, leading to growth that supported Taiwan's shift from farming to industry. From the 1960s to the 1990s, Taiwan became known for its fast economic growth, moving from an agriculture-based society to a high-income industrial economy, a period called the Taiwan Miracle.

Unlike many other economies that depend on large government-controlled companies, Taiwan's economy is powered by small and medium-sized enterprises (SMEs). These businesses provide most of the jobs in Taiwan and helped the country avoid big economic shocks, like the 1997 Asian Financial Crisis. Today, Taiwan is known for making advanced technology, especially computer microchip and high-tech electronics, and it plays a big role in the global AI Boom. However, Taiwan also faces challenges such as slow wage increases and an aging population.

History

Main article: Economic history of Taiwan

Before many people from Han China moved to Taiwan, the Taiwanese aborigines lived by farming, hunting, and gathering food. During the Ming dynasty, pirates and sailors from China sometimes traded with them. Around this time, about 50,000 Han Chinese settled near Tainan after the Dutch East Indies Company encouraged people to live there and grow food near Fort Orange. They mainly sold sugar, rice, and deerskin. Later, more Han Chinese came, and by 1683, there were about 100,000 living there.

When Qing rulers took control, Taiwan was still wild and far away, so they didn’t collect many taxes. Many people farmed the land but paid very little. When China lost the Opium Wars, it had to open new trading ports, including some in Taiwan like Tamsui, Keelung, and Kaohsiung. This helped Taiwan’s economy grow, and sugar, tea, and camphor became important products to sell to other countries.

Main article: Taiwan under Japanese rule § Economy

After a big agreement called the Treaty of Shimonoseki, Japan took control of Taiwan and began to build its economy strongly. Leaders like Kodama Gentaro and Goto Shinpei worked on making money systems easier, building roads and railways, and improving farming. They wanted Taiwan to grow food to help Japan’s industries. They changed land rules so farmers could own more land, and new farming methods helped grow more food.

When World War II started in 1937, Japan needed more supplies for its wars, so they pushed Taiwan to build factories. This helped Taiwan start making many goods, and by 1941, Taiwan could make enough for itself and Japan.

In 1945, when Taiwan was given back to Chinese Nationalist leaders, the economy was struggling. Many farms were used to support wars in China, and prices rose very high. A new leader, Chen Cheng, made rules to help farmers and created a new kind of money called the New Taiwan Dollar.

The Nationalist leaders knew they needed to change land rules to keep people happy. They sold land that Japan had owned to farmers and helped them get loans, training, and better crops. This made farming better and gave people more money to spend.

By the late 1950s, Taiwan changed its economic plans to focus on selling goods to other countries. They made it easier for foreign companies to invest and started special areas for businesses, like one at Kaohsiung Port. They also pushed for making electronics, which became very important.

When oil prices jumped in 1973, Taiwan’s leader Chiang Ching-kuo started big building projects to help the economy and improve roads, power, and other important things. Later, they built special parks for science and technology, like the Hsinchu Science Park in 1981.

Even though Taiwan’s economy faced challenges like world trade problems and health crises, it kept growing. Today, Taiwan is known for making computer chips and advanced electronics. In 2025, Taiwan’s economy grew by 8.68%, and experts think it will create many new millionaires by 2028.

Sectors

Industry

Industry makes up a big part of Taiwan's economy, about 38% of its total value. As other places offered cheaper workers, many factories moved away from Taiwan in the late 1990s and early 2000s. To fix this, Taiwan made plans to focus on industries that need more technology and skills. By 2024, Taiwan chose semiconductors, artificial intelligence, defense, cybersecurity, and communications as key areas for future growth.

Semiconductor

Main article: Semiconductor industry in Taiwan

Taiwan is very good at making tiny chips for computers and other devices. This part of the economy is very important. Companies like Taiwan Semiconductor Manufacturing Company and United Microelectronics Corporation are leaders in making these chips. They started new ways to make chips that changed the whole industry.

Information technology

Taiwan has become a big player in the worldwide technology market over the past 20 years. Even though there wasn’t much electronics industry there in 1960, the government helped build it up. Today, Taiwan works closely with big international companies and has become a center for technology development in Asia.

Skyline of modern skyscrapers in Xinyi Special District, Taipei.

Automotive

Main article: Automotive industry in Taiwan

Taiwan has a strong car industry, and many companies there are helping to make cars that use electricity. Many suppliers for Tesla, Inc. are from Taiwan.

Consumer goods

Kaohsiung skyline.

Taiwan exports a lot of steel and is one of the top exporters in the world. The country also makes many machines and tools that are used everywhere.

Maritime industries

Main article: Maritime industries of Taiwan

Construction industries

Main article: Construction industry of Taiwan

Mining

Main article: Mining in Taiwan

Agriculture, fishing and forestry

Main articles: Agriculture in Taiwan, Fishing industry in Taiwan, and Forestry in Taiwan

Taichung's 7th Redevelopment Zone

Farming has been very important for Taiwan’s economy. Even though it now makes up a small part of the economy, it was the base for growth in the past. Taiwan grows rice, sugar cane, fruits, and vegetables. It also has a big fishing industry, and fish and other sea products are important exports.

Infrastructure

Energy

Main article: Energy in Taiwan

Electrical

Main article: Electricity sector in Taiwan

Transport

Main article: Transport in Taiwan

Water supply and sanitation

A TSMC factory in Tainan Science Park, one of the many companies that make up Taiwan's IT industry

Main article: Water supply and sanitation in Taiwan

Services

Banking and finance

Main article: Banking in Taiwan

Education

Main article: Education in Taiwan

Healthcare

Main article: Healthcare in Taiwan

Housing and real estate

Retail and hospitality

Telecommunications and media

Main articles: Telecommunications in Taiwan, Internet in Taiwan, and Media of Taiwan

Tourism

Main article: Tourism in Taiwan

Foreign trade

Main articles: List of exports of Taiwan and Free trade agreements of Taiwan

See also: Taishang and New Southbound Policy

Foreign trade has helped Taiwan grow quickly over the past 40 years. Taiwan's economy focuses on selling goods worldwide, so it depends on open trade rules and can be affected by changes in the global economy. The value of trade grew a lot from the 1960s to the 1980s, and continued to grow in the 1990s. Today, most of Taiwan's exports are industrial goods, especially electronics, which get a lot of investment from the United States.

Taiwan, being a small island without many natural resources, uses its skilled workers and new ideas to compete globally. Taiwan joined the World Trade Organization in 2002 and is part of many international groups like the International Chamber of Commerce, Asian Development Bank, and Asia-Pacific Economic Cooperation. Taiwan makes important products like computer chips, LCD screens, and memory for computers. The country also imports many raw materials and energy. Even though Taiwan does not have official relations with many countries, it still trades successfully by using offices in over 60 countries. In 2010, Taiwan signed an agreement with the People's Republic of China to help its exports, but some benefits are still being discussed.

Government policies

Labor policy

Union policies

In the past, workers in Taiwan had limited rights to form unions and bargain together. But after big changes in the 1980s, more workers could join unions, and new groups like the Taiwan Confederation of Trade Unions started. Laws were updated to give workers more power to discuss their jobs and pay with employers.

Employment protection

When Taiwan became a democracy in the 1980s, workers got better protections. A new law in 1984 helped make sure workers were treated fairly, with rules about firing and pay. Companies also had to help pay for worker insurance and social security.

Active labor market policies

As Taiwan's economy changed, more people lost jobs. The government made programs to help unemployed people find work, including training and special jobs in nonprofit groups. During the 2008 financial crisis, the government created temporary jobs to help people stay employed.

Working hours

In 1984, Taiwan made a law that set the work week to 40 hours, with no more than 8 hours a day. The law also said that men and women should have equal work rights, even though old ideas sometimes made it harder for women to get certain jobs.

Science and industrial technology parks

Main article: Science and technology in Taiwan

To help grow new ideas and businesses, Taiwan’s government created special areas called science parks. These parks give companies help with money and lower costs to bring in new investments. The first park, the Hsinchu Science Park, started in 1980. It focuses on creating new technology in computers and living things and has grown to include many companies and workers.

More science parks were added later, like the one in the south, which opened in 1996. These parks help make important technology and bring in money for Taiwan. There are many other parks all over Taiwan, each helping different kinds of work and new ideas.

Data

The following table shows the main economic indicators from 1980 to 2021, with some estimates from the IMF for the years 2021 to 2027. When inflation is below 5%, it is shown in green.

In 2025, the real growth in median income was 1.35%.

Year	GDP (in Bil. US$PPP)	GDP per capita (in US$ PPP)	GDP (in Bil. US$nominal)	GDP per capita (in US$ nominal)	GDP growth (real)	Inflation rate (in Percent)	Unemployment (in Percent)	Government debt (in % of GDP)
1980	61.6	3,446.2	42.3	2,366.8	8.0%	19.0%	1.2%	n/a
1981	72.2	3,967.2	49.0	2,691.5	7.1%	15.7%	1.4%	n/a
1982	80.3	4,338.3	49.5	2,675.3	4.8%	3.0%	2.1%	n/a
1983	91.0	4,843.1	54.1	2,881.7	9.0%	1.4%	2.7%	n/a
1984	103.8	5,441.4	61.1	3,202.6	10.0%	0.0%	2.5%	n/a
1985	112.2	5,808.8	63.6	3,293.9	4.8%	-0.2%	2.9%	n/a
1986	127.6	6,541.8	78.2	4,008.1	11.5%	0.7%	2.7%	n/a
1987	147.5	7,475.6	105.0	5,325.2	12.8%	0.5%	2.0%	n/a
1988	164.9	8,264.1	126.5	6,338.1	8.0%	1.3%	1.7%	n/a
1989	186.3	9,243.6	152.7	7,575.9	8.7%	4.4%	1.6%	n/a
1990	204.0	9,999.4	166.6	8,167.2	5.5%	4.1%	1.7%	n/a
1991	228.6	11,091.9	187.1	9,081.9	8.4%	3.6%	1.5%	n/a
1992	253.2	12,171.2	222.9	10,715.5	8.3%	4.5%	1.5%	n/a
1993	276.9	13,186.4	236.3	11,256.7	6.8%	2.9%	1.5%	n/a
1994	304.0	14,353.8	256.2	12,099.7	7.5%	4.1%	1.6%	n/a
1995	330.5	15,475.9	279.1	13,066.1	6.5%	3.7%	1.8%	n/a
1996	357.4	16,602.1	292.5	13,588.3	6.2%	3.1%	2.6%	n/a
1997	385.5	17,731.3	303.3	13,948.7	6.1%	0.9%	2.7%	25.0%
1998	406.3	18,526.5	280.0	12,767.1	4.2%	1.7%	2.7%	23.7%
1999	439.7	19,903.7	303.8	13,752.7	6.7%	0.2%	2.9%	23.7%
2000	478.1	21,460.9	330.7	14,844.2	6.3%	1.3%	3.0%	26.2%
2001	482.0	21,512.3	299.3	13,357.2	-1.4%	0.0%	4.6%	30.1%
2002	516.3	22,927.3	307.4	13,651.4	5.5%	-0.2%	5.2%	29.8%
2003	548.8	24,277.2	317.4	14,040.6	4.2%	-0.3%	5.0%	32.2%
2004	602.7	26,562.5	346.9	15,290.3	7.0%	1.6%	4.4%	33.4%
2005	655.0	28,767.3	374.1	16,427.5	5.4%	2.3%	4.1%	34.1%
2006	714.2	31,220.7	386.5	16,892.9	5.8%	0.6%	3.9%	33.3%
2007	783.8	34,138.8	406.9	17,723.7	6.9%	1.8%	3.9%	32.2%
2008	805.2	34,951.8	415.9	18,053.6	0.8%	3.5%	4.1%	33.4%
2009	797.3	34,484.6	390.8	16,904.5	-1.6%	-0.9%	5.9%	36.7%
2010	889.5	38,404.3	444.3	19,181.4	10.2%	1.0%	5.2%	36.9%
2011	941.4	40,532.6	484.0	20,838.6	3.7%	1.4%	4.4%	38.3%
2012	973.2	41,741.3	495.6	21,256.4	2.2%	1.9%	4.2%	39.2%
2013	1,015.2	43,435.5	512.9	21,945.5	2.5%	0.8%	4.2%	38.9%
2014	1,066.1	45,494.3	535.3	22,844.3	4.7%	1.2%	4.0%	37.5%
2015	1,102.0	46,911.0	534.5	22,753.0	1.5%	-0.3%	3.8%	35.9%
2016	1,112.8	47,272.3	543.1	23,070.7	2.2%	1.4%	3.9%	35.4%
2017	1,143.2	48,500.8	590.7	25,061.6	3.3%	0.6%	3.8%	34.5%
2018	1,203.2	51,005.0	609.2	25,825.6	2.8%	1.4%	3.7%	33.9%
2019	1,262.2	53,476.0	611.4	25,903.2	3.1%	0.6%	3.7%	32.7%
2020	1,320.3	56,037.8	669.3	28,404.7	3.4%	-0.2%	3.9%	32.6%
2021	1,465.5	62,696.1	774.7	33,143.0	6.6%	2.0%	4.0%	28.4%
2022	1,621.7	69,500.0	828.7	35,513.2	3.3%	3.1%	3.6%	24.1%
2023	1,727.2	74,066.5	859.0	36,833.9	2.8%	2.2%	3.6%	22.1%
2024	1,801.1	77,231.7	901.6	38,662.5	2.1%	1.4%	3.6%	20.2%
2025	1,871.4	80,247.1	948.5	40,673.6	2.0%	1.4%	3.6%	18.1%
2026	1,945.2	83,412.7	996.8	42,745.0	2.0%	1.4%	3.6%	16.2%
2027	2,022.6	86,730.1	1,045.2	44,820.8	2.0%	1.4%	3.6%	14.4%

Largest companies

According to the 2025 Fortune Global 500 Rankings, Taiwan is home to some of the biggest companies in the world. These companies are publicly traded and are among the largest in the country.