Improving labor market flexibility is cited by The Heritage Foundation as contributing to Taiwan’s best ever ranking in the Index of Economic Freedom released Jan. 25. (Courtesy of Industrial Technology Research Institute)
With a score of 77.3 out of 100, Taiwan rose three spots from the previous edition and was categorized as “mostly free.” Among the 43 economies in the Asia-Pacific, Taiwan was fifth, ahead of South Korea, 29th; and Japan, 30th.
Hong Kong, Singapore, New Zealand, Switzerland, Australia and Ireland topped the survey in that order and were the only six economies classified as “free.” A total of 29 economies were rated “mostly free,” 59 “moderately free,” 64 “mostly unfree” and 22 “repressed.”
Of the 12 benchmarks used to assess an economy under the policy areas of government size, open markets, regulatory efficiency and rule of law, Taiwan did particularly well in business freedom, scoring 93.2 and trailing only Hong Kong globally. It also outperformed in fiscal health, government spending and trade freedom, and demonstrated strong improvement in labor freedom following 2017 amendments to the Labor Standards Act.
According to the 25th edition of the report, Taiwan is a dynamic, multiparty democracy characterized by an independent judiciary and a sound legal framework providing protection of property rights and upholding the rule of law.
Describing the local economy as one of the richest in Asia, the index attributed Taiwan’s economic expansion to small and medium enterprises. The well-developed commercial code and open-market policies also facilitate the flow of goods and capital, it said.
To increase the nation’s economic openness and strategic competitiveness, the report recommended reducing government involvement in export industries and boosting regulatory easing of the financial sector.
In its response later the same day, the Cabinet-level National Development Council said the results show that wide-ranging government efforts to advance economic development are paying dividends and gaining global recognition.
The NDC added that it will continue working with all relevant agencies to address issues of concern identified in the report and implement further regulatory easing to expand economic freedom. (SFC-E)