1. Introduction
2.5 Definition of Economy
1. a. Careful, thrifty management of resources, such as money, materials, or labor.
b. An example or result of such management; a saving.
2.
a. The system or range of economic activity in a country, region, or community.
b. A specific type of economic system.
3. An orderly, functional arrangement of parts, an organized system.14
There is no set definition for a small economy; there are many ways to define it, the most popular measures are population, geographic size or GDP. Economy usually implies some form of region. A region does not have a precise meaning although it does imply some sort of space limitation of the area in question and maybe some characteristics that are common to that area. Boundaries of an economy can be dynamic or static, as regions can grow or contract and the structure of economic activity can change.
2.5.1 Taiwan and Ireland’s Economy
Ireland’s population as of July 2007 was 4,109,086. Taiwan’s population at the same time was 22,858,872. Ireland’s total geographic size is 70,280 sq km, comprising of 68,890 sq km of land and 1,390 sq km of water. Taiwan’s total geographic size is 35,980 sq km, comprising of 32,260 sq km of land and 3,720 sq km of water. 15,16
14 The Free Dictionary by Farlex, “economy”, http://www.thefreedictionary.com/economy
15 CIA - The World Factbook, Ireland, https://www.cia.gov/library/publications/the-world-factbook/print/ei.html
16 Yahoo – World Factbook, Taiwan, http://kids.yahoo.com/reference/world-factbook/country/tw--Taiwan
GDP is defined as the total market value of all final goods and services produced within a country usually during a yearly period. The most common approach to measuring GDP is GDP = consumption + gross investment + government spending + (exports – imports)17
According to 2007 figures Ireland’s GDP was $253.3 billion.18 In the same year Taiwan’s GDP was $375.6 billion.19
Taiwan started off over fifty years ago as an underdeveloped, agricultural island, and has since emerged as a major economic power by transforming itself into a leader of high-technology goods. Taiwan’s economy is capitalist in nature, with the government taking a step back in the guidance of foreign trade in recent years. Privatization is the trend with many state-owned banks and industrial firms moving towards this. The economy is mainly export orientated, with the majority of exports going to China and the US.
Taiwan depends on an open world trade regime and any downturn in the world economy will leave it vulnerable. Taiwan is a member of the Asian Development Band, the WTO and the Asia-Pacific Economic Cooperation (APEC) forum, and it is an observer at the OECD. Taiwan’s top three export partners are China, the US and Hong Kong with exports such as electrical, electronic and computer equipment. The main importers to the island are Japan, the US and China with imports such as mineral fuels, oils, electric and electronic components, and raw materials. China including Hong Kong accounts for 25%
of Taiwan’s total trade and 40% of total exports. Trade with the EU is less than 15% of the total.20 China is Taiwan’s number one destination for foreign direct investment after Japan.21 Taiwan has had a good year during 2007 where its GDP growth rate went above 5% and unemployment dropped below 4%.22 Agriculture contributes nearly 2% to the GDP of the island, with the main crops being rice, sugarcane, fruit and vegetables.
17 Central Stastics Office Ireland, Economy, IMF Summary Data Page for Ireland http://www.cso.ie/statistics/imfsummaryire.htm
18 CIA – The World Factbook, Ireland, https://www.cia.gov/library/publications/the-world-factbook/geos/ei.html#Econ
19 , 21, 22 CIA – The World Factbook, Taiwan, https://www.cia.gov/library/publications/the-world-factbook/geos/tw.html
23, 24The Federation of International Trade Associations, Taiwan, http://www.fita.org/countries/taiwan.html
Taiwan’s natural resources are limited, but the manufacturing industry accounts for about 50% of total GDP. Taiwan still has very successful traditional industries such as iron, steel, chemical and mechanical which account for almost half the industrial production.
Taiwan’s success in recent years has come from being one of the largest suppliers of semi-conductors, computers and mobile phones in the world, they can also boast to being the largest supplier of computer monitors and LCD screens.
Ireland’s economy is small, modern and very much trade-dependent, over the last twelve years the economy has seen growth averaging about 6%.23 Industry and services are now the biggest industries where once it was agriculture. The modern economy is now based on sectors like IT, electronics, and pharmaceuticals. The export sector is extremely important to the economy and is mostly dominated by foreign multinationals. Recent growth in the economy was fueled by the boom which hit the construction industry, recent business investment and consumer spending. GDP is the second highest in the EU behind Luxembourg.24 The government has tried to concentrate on putting an end to price and wage inflation. The beginning of 2008 has seen a slowdown in the property market, a slowdown in the construction industry, there has also been more intense global competition which leaves the forecast for 2008 a little lower than the success of recent years. The agricultural industry accounts for 3.5% of total GDP, with crops such as cereals, vegetables and the main area of bovine breeding.25 Fishing is another important industry, with Ireland being the fourth largest salmon producer in Europe. Ireland exports 60% of its meat production. Ireland’s service industry mainly the IT and electronics sectors accounts for 60% of total GDP and tourism contributes 5% to total GDP.26
Ireland’s top three export partners are the US, UK and Belgium with exports mainly comprising of organic chemicals, electronic and telecommunication equipment, and pharmaceutical products. Its main import partners are the UK, US and Germany,
25 CIA – The World Factbook, Ireland, https://www.cia.gov/library/publications/the-world-factbook/geos/ei.html#Econ
26 UK Trade and Investment, Countries, Europe-Western Europe-Ireland, https://www.uktradeinvest.gov.uk/ukti/appmanager/ukti/countrie
27,28 The Federation of International Trade Associations, Ireland, http://fita.org/countries/ireland.html
comprising mainly of machinery, electronic components, vehicles, and mineral fuels and oils.27