Economy

The economy of Taiwan is one of the most fascinating success stories of the 20th and 21st century — a central chapter in the rise of the Asian Tigers, alongside South Korea, Singapore, and Hong Kong. From the 1950s onward, Taiwan moved from a rural, low-income island to a high-tech, export-driven powerhouse.

Two indicators that very well reflect the strength and future direction of Taiwan’s economy are:
1) Foreign exchange reserves per capita, and
2) Investment in research and development, known as GERD (Gross domestic expenditure on R&D).

As of early 2024, Taiwan holds around $568 billion in foreign exchange reserves — among the top five globally. With a population of just over 23 million, that’s about $24,500 per person. This is one of the highest per capita reserves in the world, ahead of much larger countries. These reserves act as a financial safety net. They allow the central bank to protect the New Taiwan Dollar, manage inflation, and respond to global market shocks without borrowing. In short, it tells the world: Taiwan is stable, prepared, and trustworthy.

Equally important is Taiwan’s serious investment in innovation. The country spends about 3.6% of its GDP on R&D, one of the highest rates in the world — above Japan and the USA. While the absolute amount invested in R&D is of course larger in big economies like the USA or China. What matters here is that the spending is shown as a percentage of the entire GDP — not just as a raw number like total dollars spent— which makes it easier to compare across countries, no matter their size.

This shows how much one society is willing to invest in future discoveries, new patents, and continuous improvement. These spending figures include private companies, government, and the academic sector combined. A healthy GERD isn’t just a statistic — it’s a sign of a country building its own future. At some point, high R&D investment becomes like an economic perpetuum mobile — constantly creating new value, jobs, and industries.

Taiwan is also a global export leader. In 2024, exports reached $475 billion, which equals $20,300 per capita — among the highest in the world. For comparison:

• Germany: $1.67 trillion in exports ≈ $20,120 per capita
  

• South Korea: $683.9 billion in exports ≈ $13,400 per capita

This shows how much Taiwan punches above its weight in international trade, especially in semiconductors, electronics, and machinery. Much of its exports go to major markets like China and the USA, proving Taiwan's ability to stay competitive on both sides of the Pacific.

Taiwan’s business environment is another highlight. With a VAT rate of just 5%, it's one of the lowest in the world. This low tax rate makes starting and growing businesses easier, especially for small and medium enterprises (SMEs), which are a big part of Taiwan’s economic ecosystem. It also benefits consumers directly — keeping prices more affordable and encouraging people to spend more, which supports domestic growth and strengthens internal demand.

Another big advantage of Taiwan’s business environment is how easy and affordable it is for locals to start — and restart — a business. The system makes it cheap to start, cheap to fail, and cheap to start again, which encourages people to take risks, be creative, and keep going until something sticks. This flexibility is one of the quiet strengths behind Taiwan’s dynamic economy.

One more surprising detail: despite importing all of its crude oil, gasoline in Taiwan costs less than €1 per liter. This reflects smart energy policies and government subsidies that keep daily costs low for citizens and businesses alike.

Lastly, Taiwan’s GDP per capita (PPP) reached $82,610 in 2025, ranking it 12th in the world — a remarkable figure for a country that only a few generations ago was considered a developing economy.

In short:
Taiwan combines financial strength, high innovation spending, world-class exports, and a pro-business environment. Together, these elements create an economy that is not only resilient, but also future-focused, adaptable, and constantly evolving. It’s no wonder Taiwan plays such a quiet yet central role in the global economy — and why it can serve as a model of sustainable, high-value growth for others, including countries like Croatia.