Friday May 24, 2024

The Taiwan model

By Atta-ur-Rahman
October 12, 2022

In order to migrate to a technology-driven knowledge economy, there needs to be a complete change of direction. The emphasis must shift to creating top class universities of engineering and technology to meet the needs of properly qualified manpower required for the manufacture of high-tech goods (such as electronics, automobiles, engineering goods, pharmaceuticals, IT products, purified minerals, new materials etc).

The linkages between universities and industry must be strengthened through technology parks and policies to promote new startups. The Higher Education Commission has a critically important role to play in this respect.

The government needs to encourage private enterprises to invest in R&D related to the production of high technology products by helping them set up laboratories, training manpower, assisting in technology transfer and offering long-term tax breaks for investments in the manufacture and export of selected high technology products.

In this article, I will focus on how tiny Taiwan with a population comparable to that of Karachi (about 23.4 million) has become an economic giant with annual exports of $500 billion (some 20-fold higher than those of Pakistan) and a per capita income of over $33,000. The first step Taiwan took was to bring in effective land reforms that helped root out the feudal landlords and created a new class of landowners with capital that could be invested in industrial enterprises.

There was a deliberate shift from an agricultural economy to an industry oriented one with export-led growth. Cheap labour-intensive industries such as those involved in the manufacture of textiles or toys were replaced by heavy automated industry. The privatization of government enterprises helped make industrial production more competitive and efficient. Technological developments were promoted through the establishment of the Hsinchu Science Park in 1981. Investments from the US initially and later from mainland China spurred these developments.

The economic developments of Taiwan can be divided into four periods. The first of these (1950-62) may be classified as the ‘import substitution of labour-intensive industries’ period. The second (1962-80) was the ‘export-substitution with import-substitution of intermediate-goods’ period. The third (1980-2000) was the ‘liberalization and technological orientation’ period. The subsequent period has been the ‘economic globalization’ period.

The ‘National Science Development Plan’ was established in 1968 which catalyzed the shift of the country’s science and technology (S&T) policy from pure science and basic research to applied technological research to meet the needs of national development and exports in high-tech areas such as electronics and computers. Commercialization of technologies was promoted through the “Science and Technology Development Program” in 1979. R & D in government institutions often lacks focus and sense of urgency. Therefore, it was promoted in private enterprises by offering liberal funds for the execution of designated R&D projects. The private sector now plays the leading role in both developing and acquiring industrial technologies with the government providing financial support and consultation.

Government-sponsored research institutes (GSRIs) effectively support private enterprises to execute contracted research projects. They then transfer the outcomes of those projects to the industry for commercialization. The government established the Industrial Technology Research Institute (ITRI) in 1973 which served to meet this objective. The main focus of the research promoted in private enterprises by government support has been in the fields of electronics, computers, communications, opto-electronics, micro-electro-mechanical systems, mechanical systems, chemicals, biotechnology, pharmaceuticals, new materials, aviation, space, measurement standards, energy, environmental protection and other carefully selected areas. The establishment of another GSRI, the Institute for Information Industry (III) differs from the ITRI in that it focuses on the development of new futuristic hardware technologies whereas ITRI focuses on software technologies. Taiwan is today the third largest exporter of IT related products, behind only the US and Japan.

The establishment of the Hsinchu Science-based Industrial Park in 1980 mentioned above and the implementation of the ‘Program for Strengthening the Education, Training, and Recruitment of High-level Science and Technology Personnel’ in 1983 were important developments that occurred in Taiwan’s technological orientation period. Thousands of Taiwanese bright graduates were sent for PhD and post-doctoral training abroad during 1980-2000 and the favourable government policies induced them to return and contribute to socio-economic development.

A similar policy was initiated by us when I was chairman of the HEC during 2002-2008; it led to a major transformation of the landscape of higher education of Pakistan, so much so that we caught up with India by 2018 in per capita research output. We are now in the process of assisting in the modulation of the policies of the HEC so that there is greater emphasis on industry-oriented R&D and Pakistan can progressively migrate to a technology-driven knowledge economy. The Hsinchu Science Park has created a number of other Science Parks including the Jhunan Science base in Miaoli, the Longtan Science base in Taoyuan, the Tongluo Science base in Miaoli, the Yilan Science base in Yilan and the Biomedical Science Park in Zhubei.

A key feature of the development of Taiwan has been its success in attracting multinational corporations (MNCs) to undertake offshore R&D. The hundreds of MNCs that are now involved in new technology development in Taiwan include Intel, IBM, Hewlett Packard and Sony who have established their regional R&D centers in Taiwan, making it a leading hub of new technology development in the world. These activities have been promoted by the establishment of Multinational Innovative R&D Centers (DoIT Taiwan). There are about 70 such centres across Taiwan including those supported by MNCs. The Local Industry Innovation Engine Program (LIIEP) was launched to increase industrial value-added product exports and to reinforce industrial clusters.

Pakistan needs to follow the models set up by China, Taiwan, Korea and Singapore to migrate to a strong knowledge economy. For this we must have an honest, visionary and technologically competent government so that our future directions for socio-economic development can quickly change and the creative talents of our youth can be fully utilized.

The writer is the former federal minister for science and technology and former founding chairman of the HEC. He can be reached at: