Industrial policy, Structural Change, and Pattern of Industrial Productivity Growth in Taiwan

Transcription

1 Industrial policy, Structural Change, and Pattern of Industrial Productivity Growth in Taiwan Tsu-tan Fu* Department of Economics & Center for Efficiency and Productivity Research Soochow University, Taiwan Hsing-chun Lin Department of Applied Economics, National Chiayi University, Taiwan Yih-ming Lin Department of Applied Economics, National Chiayi University, Taiwan Wei-sing Kong Taiwan Research Institute, Taiwan (Taiwan KLEMS Research Team) This paper is prepared for the third World KLEMS Conference, Tokyo, Japan on May 19, 2014.

2 Industrial policy, Structural Change, and Pattern of Industrial Productivity Growth in Taiwan Tsu-Tan Fu, Hsing-Chun Lin, Yih-Ming Lin and Wen-Hsin Kong (Taiwan KLEMS Research Team) Abstract The purpose of this study is to investigate the relationship between industrial policy, structural change and productivity growth of Taiwan at industry level in To serve such purpose, we construct the Taiwan KLEMS Database, in which the economy is divided into 31 industries. Following the methodology developed by Jorgenson, Gollop and Fraumeni (1987) and Jorgenson, Ho and Stiroh (2005) and the manual of Asia KLEMS, we decompose the output growth into contributions of capital, labor and intermediate inputs (energy, materials and services) as well as total factor productivity. In the last decades, Taiwan s industrial policy focused on to support the socalled hi-tech industries, such as ICT industry (13 Electrical and Optical Equipment, Post and communications). The strategies include establishment of science-based industrial parks, technological support from national research institute and national plan, providing tax incentives and special support for developing semiconductor industry, and so on. It is clear that there are significant structural changes happened in past decades. The industry weights for primary and secondary decrease over time, whilst the important of tertiary industry increases during the period of The industry weights of most other industries in the Secondary Industry decreased except Electrical and optical equipment and Basic and fabricated metal. On the contrary, most industries in Tertiary Industry increased during It is shown that the industrial policy is a significant factor to influence the industrial structural change. It is also found that in several industrial, such as food products and textile, rubber and plastics, the growth rates of labor input (measured by total working hour, HEMP) are negative. We also find that the TFP growth rate of Electrical and Optical Equipment industry is the highest in secondary industries whilst the TFP growth rate of Post and communications is the largest among the tertiary sector, which means the impact of the industrial policy does not have impact on structural change, but also influences the TFP growth rate. 1

3 1. Introduction The purpose of this paper is to investigate the relationship among industrial policy, structure change and TFP growth pattern at industry level in To reach this purpose, we construct the Taiwan KLEMS Database, in which the economy is divided into 31 industries based on the Asia KLEMS manual. Following the methodology developed by Jorgenson, Gollop and Fraumeni (1987) and Jorgenson, Ho and Stiroh (2005) and the manual of Asia KLEMS, we decompose the output growth into contributions of capital, labor and intermediate inputs (energy, Materials and services) as well as total factor productivity. We further conduct cross-period and crossindustry comparisons on the structures of industry output growth and of the factor contribution in Taiwan. The empirical results show that the range of industry level growth rate varies widely by industry and by time period. The results also show the structure of the factor contribution share to be varied by industry. But, in general, the contribution share from intermediate inputs dominates that from other inputs (capital and labor) for most industries in Secondary Sectors. However, such input dominant contribution effect differs by industry in Tertiary industries. The above mentioned results indicate the importance of growth decomposition analysis at industry level. We find that Capital is the main driver to value added (VA) output growth and Intermediate input is the main driver to gross output (GO) growth. Among those intermediates inputs, we find that the contribution share from Materials input (ConM) outweighs those from other inputs (capital and labor) for most industries in Secondary Sectors. We also find that the contribution share of Services input (ConS) plays dominant role to the GO growth for most industries in Tertiary Sector. Furthermore, our cross period comparison results indicate that the role of contribution shares of K and II decreased over time, instead the contribution from TFP increased over time. At last, Tertiary industries were having higher growth rate as well as higher TFP than those secondary industries for the last 3 decades in Taiwan. The structure of this paper is outlined as the following. We first give brief Taiwan industrial development and related policies in section 2. In section 3, we will introduce the methodology used with some descriptions on data and variables employed. In section 4, the structure of Taiwanese industry based on industry weight 2

4 and growth rate are analyzed. Empirical cross-industry and cross-period comparisons on the sources of output growth analyses will be conducted in Section 5. The paper will be ended with the concluding remarks. 2. The Main Taiwan Industrial Development Strategies Taiwan has experienced remarkable economic growth since the 1960s. In the 1960s, the focus industries are the light industries, in which the government policy is development of light industries for import substitution with its average high annual GDP growth rate over 10.2%, which is called the import substitution stage. In the 1970 s, heavy and chemical industries grew rapidly due to the government s export promotion policy, which is called the export expansion stage. With the cheap production costs and the availability of high quality labor force prior to the 1980s, Taiwan s policy of export expansion had been successfully pursued. The annual GDP growth rates reached 9.27 on average during the period 1971 to 1980, as shown in Figure 1. Since 1980, Taiwan has been bumped into considerable challenges. In political terms, Taiwan become a truly democratic society with the appearance of a powerful opposition party, which make Taiwanese society become more diversified. In economic arena, the appreciation of the New Taiwan dollars (NT$) which make the exchange rate form 40NT$/US$ to 25 NT$/US$. The upward trend in the valuation of the NT$ cause the inflation and asset bubbles. The stock market and real estate market began to fluctuate. Furthermore, the low cost labor had gradually been exhausted. The wages in Taiwan are gradually increasing. A number of labor intensive industries had already lost their comparative advantage. In order to survive, manufacturers were forced to move their production bases to Southeast Asia or to mainland China. Economic liberalization and Internationalization In the early 1980s, in order to solve the increasing trade disputes due to the economic imbalance, the Taiwan government implements the policy of economic liberalization, which including trade liberalization, the lifting of foreign exchange rate control and the deregulation of financial sector. In 1991, the government approved 15 new private commercial banks establishment whist several new private banks were established through the reorganization of trust companies and credit cooperatives. 3

5 There was a rapid increase in the number of commercial banks in Taiwan. Furthermore, some new business of banks, such as commercial papers and short term certificate, are permitted to engage. On the other hand, since the labor cost and land cost gradually rise, a large amount manufacturers which lost their competitiveness in the traditional manufacturing industries moved oversea from the late 1980s. These manufacturers started to invest in Mainland China and Southeast Asian countries, such as Vietnam, Indonesia, Thailand, Philippines, Malaysia etc. The industries move their production oversea includes paper and plastics, basic metals, textile products, garments, fur and leather goods, wood and bamboo products, rubber products and other labor intensive industries. The increase in oversea investment makes the structure change in Taiwan economic development. The manufacturing sectors kept decreasing and the service sectors kept increasing. ITRI and the technical support of the NSTP In order to maintain continued growth, the government s industrial policy turned toward a greater emphasis on the upgrading of the industrial technology, which makes the capital and technology intensive industries replace the more labor intensive industries. The Industrial Technology Research Institute (ITRI) is founded and sponsored by Taiwanese government, which is a nonprofit R&D organization engaging in applied research and technical services. ITRI s main tasks are the undertaking of industry-research technology and product R&D, along with the diffusion of the results of their work among private manufacturers. In addition, ITRI also provides technical supports and services for small and medium enterprises (SMEs). With the support by the National Science and Technology Project (NSTP), the ITRI gradually grew stronger and bigger. The main objective of NSTP is to encourage industry to undertake R&D work. The NSTPs promote the development of ICT industries, promote the upgrading of traditional industries (modernization and automation), establish the basic infrastructure for industrial development, improve efficient use of resources and solve common problems shared by industries. ITRI and NSTPs carry out R&D work and transfer the results to the private manufacturers, which made a significant, impressive 4

6 contribution to industrial upgrading. By disseminating both technology and talent, ITRI has played a vital role in transforming Taiwan s economy from a labor-intensive industry to a high-tech industry. Numerous well-known, high-tech companies in Taiwan, such as leaders in the semiconductor industry TSMC and UMC, can trace their origins to ITRI. The Establishment of the HSIP Since the first oil crisis happened, the government realized that Taiwan s industrial development was based on a labor-intensive structure. Taiwan government understood that it is necessary to pursue a policy of development hi-tech, high value-added industries. In order to attract investment from foreign hi-tech manufacturers, the government realized that government had to construct an appreciate, attractive investment environment. Therefore, the Hsin-Chu Science-based Industrial Park (HSIP) was founded for high-tech industries (ICT). The HSIP was established similarly to those in Silicon Valley in California. No one can doubt the contribution of the HSIP for Taiwan economic development. This Park had a major impact on stimulating development of ICT industries. Firms located within the HSIP can enjoy tax incentives and tariff exemptions and deductions, which is the main factor to attract companies to invest within the Park. In addition, HSIP helped in the diffusion of technology by encouraging manufacturers to recognize and reap the benefits of congregating together. HSIP has become the main center of development of Taiwan ICT industries. In 1997, there were 245 companies located in the Park, employing a otal of workers. The total business revenue made by the Park is up to 13.9 billions US$, which account for 5% of total GDP. The policy for subsidizing research and development (R&D) and sponsoring cooperative research has helped to heighten the rapid technological progress in high-tech industries, which grew quickly in the 1980s, and become the dominant industry in the 1990s. Tax incentives under the Statute of Upgrading Industries In the mid-1980s, with the appreciation of the NT$, the labor and land cost begin to rise gradually, which makes the labor-intensive industries loss their competitiveness. It is necessary to accelerate the process of industrial upgrading, improve products 5

7 value-added, seek out competitiveness. At the end of 1980s, the Statute of Upgrading Industries was passed and implemented on 1 January, 1991.The main content of the statute is the provisions for tax incentives (tax credits, tax exemptions and tax deferrals) to encourage manufacturers to undertake R&D work, implement automations, and promote the development of ICT industries so as to strengthen manufacturers competitive advantage. Promotion of the Semiconductor industry In 1976, 37 young engineers were dispatched to the US and to undergo training. These young engineers not only bring technology, but also establish a Complementary Metal Oxide on Silicon (CMOS) plant in ITRI laboratories. The government invested in excess of NT$400 millions in the development of semiconductor industry and signed various agreements with various foreign semiconductor manufacturers, such as RCA for technology transfer and personal training at late 1970s. In addition, the government also directed plans to bring together of private sector capital and transfer technology to private companies. During the 1980s, the government directed the establishment of United Microelectronic Corporation (UMC) and Taiwan Semiconductor Manufacturing Company (TSMC). A number of small design companies began to establish in HSIP. With the government s investment in semiconductor industry and the establishment of UMC and TSMC, not only was production process technology being continuously improved, but various other semiconductor related technologies were also innovated, including circuit design, mask production, packaging and testing, and so on. Taiwan s economic growth slowed down in the late 1990s and become sluggish in 2000s as a result of a sequence of negative impacts such as the Asian financial crisis in 1997, worldwide economic recession in 2000, the financial tsunami in 2008, and the financial debt crisis in Europe in Up to date, the focus industries in Taiwan include Information and Communications, Electronics and Optoelectronics, Material, Chemical and Nanotechnology, Medical Device and Biomedical, Mechanical and Systems, Green Energy and Environment. 6

8 1960's Light industry Import Substition Average GDP Growth rate 10.2% 1970's Heavy and Chemical Industry Export Expansion 9.27% 's High-Tech Industry ICT Rapid Growth 7.37% 2000's Knowledge-Intensive Manufacturing and Service Industry ICT Growth slow down 3.76% Figure 1: An overview of Taiwan s Industrial Development 3. Methodology 3.1 Growth and Productivity Accounts We follow the growth accounting methodology provided by the Asia KLEMS manual (2012) which was developed by Dale Jorgenson and associates as outlined in Jorgenson, Gollop and Fraumeni (1987) and more recently in Jorgenson, Ho and Stiroh (2005). It is assumed that industry gross output is a function of capital, labor, intermediate inputs and technology. Following the notation of Asia KLEMS manual (2012), the production functions are assumed to be separable in these inputs, Y = g ( Y ) = f ( K, L, X, T) j j ij j j j j where Y is output, K is an index of capital service flow, L is an index of labor service flows and X is an index of intermediate inputs, which consists of the intermediate inputs purchased from the other domestic industries and imported products. Intermediate inputs (X) include energy (E), materials (M) and services (S) inputs in this model. Under the assumptions of constant returns to scale and competitive markets, the value of output is equal to the value of all inputs: PY = PK + PL + P X Y k L X j j j j j j j j where Y P denotes the price of output, j X Pj denotes the price of intermediate inputs, K P denotes the price of capital services and j L P denotes the price of labor services. j 7

9 The value share of each input is defined as follows: X L P X P X L L P K v = ; v ; Y = Y v = P Y P Y P X L K The assumption of constant returns to scale implies v + v + v = 1. K Y K Y The standard growth accounting decomposition of output growth into the contribution of each input and TFP (denoted by A Y ) can be expressed as: lny = v X ln X + v K ln K + v L ln L + ln A Y where the contribution of each input is defined as the product of the input s growth rate and its two period average revenue share. 3.2 Taiwan KLEMS Database We construct the Taiwan KLEMS Database following the Asia KLEMS manual, in which the economy is divided into 31 industries. (the 32th sector, the EXTRA-TERRITORIAL ORGANIZATIONS AND BODIES in Asia KLEMS manual, is not available) The data resources are based on the data published by the Directorate General of Budget, Accounting and Statistics, Taiwan (DGBAS) for the period For the output data (Gross output and Value added), we utilize the National Income Survey data (93 SNA) and convert 65 sectors into 31 sectors. Since the capital data is still under constructing, we employ the capital stock as the capital service in this paper. Capital stock data is also published by DGBAS. We convert capital data (16 sectors available after 2001 and 11 sectors available before 2001) into the capital stock in format of 31 sectors. Labor data include labor compensation and working hour data. We employed the raw survey data from Manpower data, which is conducted in May since There are about 60,000 observations in this survey every year. Compiled manpower data with Employees Earnings Survey, we can obtain labor compensation and working hour data. Intermediate Inputs (II) include energy(e), materials(m) and services(s). The data from Intermediate Input of national income and divide all sectors into three sectors. We use the Input-output table to get the inputs of E, M, S for each sector. Following the methodology developed by Jorgenson, Gollop and Fraumeni (1987) and 8

10 Jorgenson, Ho and Stiroh (2005), we decompose the output growth into contributions of capital, labor and intermediate inputs (energy, materials and services) as well as total factor productivity. 4. Economic Performance of Taiwan: Industry structure in Taiwan Value added weights at industry level: The industry weights for primary and secondary decrease over time, the important of tertiary industry increases during the period of , as shown in Table 1 and Figure 2. Table 1 also indicates that the industry weights of primary, secondary and tertiary industries are 1.73%, 30.99% and 67.27% in , respectively. As for value added weights for 31 sectors, Table 2 shows the level and some changes in industry weight in the last 3 decades. In 1981, we find that 3.Food products, beverages and tobacco, 4.Textiles, textile products, leather.., 13.Electrical and optical equipment, 17.Construction are important industries in the Secondary Industry, whereas 27.Public admin and defense.., 19.Wholesale trade and commission trade, 20.Retail trade.. and 25.Real estate activities are industries with high weight in the Tertiary Industry. However, Table 2 shows that that except 13.Electrical and optical equipment and 11.Basic and fabricated metal, the industry weights of most other industries in the Secondary Industry decreased over time. On the contrary, Table 2 also shows industry weights of most of industries in the Tertiary Industry to be increased over time. As a result, we can find that in 2010 industries such as 13.Electrical and Optical equipment, 11.Basic and fabricated metal products, and 8.Chemicals and chemical products in the Secondary Industry, as well as 19.Wholesale trade and commission trade, 25.Real estate activities, 27.Public admin and Defense., 20.Retail trade.. and 24.Financial intermediation in the Tertiary Industry, are sectors with relatively high weight. 4.2 Industrial Value Added and Output Growth by sub-period Value Added Growth at Industry Level 9

11 Table 3 presents the growth of industry value added for the last 3 decades. The average growth rate in was 7.46%, but it decreased substantially in the later 2 decades. Among 31 sub-industries, we also find in Table 3 and Figure 3a that 13.Electrical and optical equipment and 8.Chemicals and chemical products in the Secondary Industry, as well as 23.Post and telecommunications, 29.Health and Social work, 26.Renting of m&eq.., 19.Wholesale trade.., and Hotel and restaurants in Tertiary Industry, are sub-industries with annual growth rate higher than 7%. Cross period comparisons on the annual growth rate at industry level can also be seen in Figures 3b-3d. It is also noticed that growth rate for 31 industries ranged from 15.76% (Industry#23) to -5.86% (industry#5) and varied by sub-period, which implies the importance of analysis at industry level. Output Growth at Industry Level Output growth is defined to be the addition of value added and intermediate inputs. Table 4 presents the growth of industry output for the 3 decades. Despite growth rates in growth output are different from those in value added, however by comparing Figures 3a and 4a, one can see that the growth rate ranks of 31 industries in gross output (Figure 4a) and in value added (Figure 3a) are quite similar. Cross period comparison of growth rate in industry output, Figures 3b-3d, also indicates vast differences between industries and sub-periods. 4.3 Input growth at industry level by period Regular inputs used for production include labor, capital and intermediate inputs (energy, materials, and services). Table 5 shows the growth of labor input at industry level by period whilst Table 6 shows the growth of capital stock at industry level by period. Similar growth of other inputs can be generated from Taiwan KLEMS database. In Figures 5a-5e, we show the growth of labor, capital, energy, materials and service at industry level in In general, we find all inputs have positive growth for most industries in the sample period. But, we also find that growth rates vary substantially by industry for all inputs. 4.4 The TFP Growth at Industry level Table 7 presents the TFP growth rate by industry in the last 3 decades. As in the 10

12 standard growth accounting practice, the TFP is defined as the residual contribution which is unexplained by factor inputs. The resulted TFP growth for each industry can be found in Table 7 and Figure 6a-6d. It is shown that the figures of TFP growth in secondary industry are relative lower than the figures in tertiary industry. The TFP growth rate of Electrical and Optical Equipment industry is the highest among secondary industries whilst the TFP growth rate of Post and communications is the largest among the tertiary sector, which means the impact of the industrial policy does not have impact on structural change, but also influences the TFP growth rate. 5. Sources of Gross Output Growth at Industry Level 5.1 Sources of Industry output for the whole sample period ( ) The standard growth accounting decomposes gross output (GO) growth into the contribution of each input and TFP. That is, growth rate of GO can be decomposed into contributions of K, L, II and TFP on GO growth. While Table 8a presents results of such decomposition for 31 industries in , Table 8b presents such contribution decomposition in percentage share for each input. Such output growth decomposition for the whole economy can be further shown in Figure 5a and Figure 5b). Despite results of such decomposition vary by period, in general, we still can easily see that the contribution from intermediate inputs (II) (sum of energy (E), materials (M) and services (S)) dominates the growth, which is followed by contribution from Capital (K), then Labor (L), and finally TFP. The average contribution share of inputs for the whole economy, see Figures 5a and 5b, show that the contribution share of II seems to be larger in early decade ( ) than in later decades ( , ). On the contrary, contribution share from K (ConK) became increase over time. Such results seem consistent with the change of industrial structure in Taiwan, of which the size of the secondary (manufacturing) sector with relative high contribution share in II has been reduced over time. Despite that the share of factor contribution varies by industry, but, in general, the results show that the contribution share from II dominates that from other inputs (K, L) 11

13 for most industries in Secondary Sectors. However, Table 6b shows that such input dominant contribution effect may differ by industry in Tertiary sectors. For example, among all factor contribution in 21.Hotel and restaurant industry, II has the largest contribution share (49%), TFP has the second largest share (18%), and K has the lowest share (15%). In the industry 23.Post and telecommunications, TFP share is 30%, L share is 28%, II share in only 24%, and K share is only 18%. In the case of 28. Education industry, L has dominant share of contribution (77%). Ranking of contribution effect and percentage share for inputs for each industry during can be seen in Figures 6a and 6b. As for composition within intermediate inputs, Table 6b also shows that M accounts for most contribution from II for those secondary industries. However, for most tertiary industries, services input (S) accounts most of contribution from intermediate inputs. 5.2 Sources of Industry output growth: Cross-period comparisons Tables 7, 8 and 9 present sources of industry output growth analyses (in growth rate (tables a) and in % share (tables b)) for periods of , , and , respectively. Since there are 31 industries with different decomposition results, thus in this section we intend to choose 3 industries to show such vast difference in industry level in Taiwan. The 13.Electrical and optical equipment is the industry with the largest industry weight and growth rate in the Secondary sectors. It is also regarded as one of ICT producing industry in Taiwan. Taking it as example, we find the shares of II have been high in every period. But the size of such share reduced over time. The contribution from M also dominates other intermediate inputs. The contributions from K and L reduced were much smaller than that from II. TFP shows insignificant impact on growth. The results can be seen in the following table: Period ConK ConL ConE ConM ConS ConII TFP

14 *Sources of GO growth for the Electrical and Optical Equipment industry The 19.Wholesale and commission trade is the industry with the biggest industry weight in the Tertiary sectors. We find the contribution shares of factor inputs to be dominated by L in early decade, but by II and TFP in the later decades. It should be noted that TFP increased over time, and became dominant driver in The results discussed can be demonstrated in the following table: Period ConK ConL ConE ConM ConS ConII TFP *Sources of output growth in the 19.Wholesale and commission trade industry In addition, the 23.Post and communications is the industry with the biggest annual growth rate in the Tertiary sectors. This industry is also regarded as major ICT using industry in Taiwan. We find that this industry had quite high contribution share on L in , high share on II and TFP in , but very high share on K in We list such contribution shares of its factor inputs as the following: Period ConK ConL ConE ConM ConS ConII TFP *Source of output growth in the 23.Post and communications industry Based upon the above discussions, we may conclude that the contribution share of II to industry output in most Tertiary industries tends to be smaller than those Secondary industries. 6. Concluding Remarks 13

15 In the last decades, Taiwan s industrial policy focus on to help the so called hi-tech industries, such as ICT industry (13 Electrical and Optical Equipment, Post and communications). The strategies include establishment of science-based industrial parks, technological support from national research institute and national plan, providing tax incentives and special support for developing semiconductor industry, and so on. It is clear that there are significant structural changes happened in the past decades. The industry weights for primary and secondary decrease over time, whilst the important of tertiary industry increases during the period of The industry weights of most other industries in the Secondary Industry decreased except Electrical and optical equipment and Basic and fabricated metal. On the contrary, most industries in Tertiary Industry increased during It is shown that the industrial policy is a significant factor to influence the industrial structural change. The empirical results show that the output growth rate for 31 industries ranged from 11.92% to -2.97% in and varied by sub-period. The results also show the structure of the factor contribution share to be varied by industry. But, in general, the contribution share from intermediate inputs dominates that from other inputs (capital and labor) for most industries in Secondary Sectors. In several industrial, such as food products and textile, rubber and plastics, the growth rates of labor input (measured by total working hour, HEMP) are negative. However, such input dominant contribution effect differs by industry in Tertiary industries. This indicates the importance of growth decomposition analysis at industry level. We also find that the TFP growth rate of Electrical and Optical Equipment industry is the highest in secondary industries whilst the TFP growth rate of Post and communications is the largest among the tertiary sector, which means the impact of the industrial policy does not have impact on structural change, but also influences the TFP growth rate. References Jorgenson, D.W., F.M. Gollop and B.M. Fraumeni (1987), Productivity and US Economic Growth, Cambridge MA: Harvard University Press. 14

16 Jorgenson, D.W., M. Ho and K. Stiroh. (2005) Information Technology and the American Growth Resurgence, MIT, Pyo, Hak, K.H. Rhee and H. Chun (2012), Asia KLEMS Growth and Productivity Accounts, version1.0. Draft and Proposal, Part 1 Methodology. Asia KLEMS consortium. 15

17 Table 1: The industry Value Added weights of Primary, secondary, Tertiary and Manufacturing by sub-period unit:% Primary Secondary Manufacturing Tertiary

18 Table 2: Industry Value Added Weights by selected year unit:% Sector Industry number and name Secondary Tertiary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons

19 Table3: Growth of Industry Value Added by Period unit:% Sector Industry number and name Secondary Tertiary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons

20 Table 4: Growth of Industry Gross Output by Period unit:% Sector Industry number and name Secondary Tertiary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons

21 Table 5: Growth of Industry Labor Input (HEMP) by Period unit:% Sector Industry number and name Secondary Tertiary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons

22 Table 6: Growth of Industry Capital Stock by Period unit:% Sector Industry number and name Secondary Tertiary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons

23 Table 7: Growth of Industry TFP by Subperiod unit:% Sector Industry number and name Secondary Tertiary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply Construction Sale, maintenance and repair of motor vehicals Wholesale trade and commission trade Retail trade, except of motor vehicals and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons

24 Table 6a: Sources of Industry Output Growth (in growth rate): Sector Industry number and name GO ConK ConL ConE ConM ConS ConII TFP Secondary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply Tertiary 17.Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons Note: GO means gross output; ConK, ConL and ConII mean contribution of capital, labor and intermediate inputs on gross output. 23

25 Table 6b: Sources of Industry Output Growth (in % share): Sector Industry number and name GO ConK ConL ConE ConM ConS ConII TFP Secondary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply unit:% Tertiary 17.Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons Note: GO means gross output; ConK, ConL and ConII mean contribution of capital, labor and intermediate inputs on gross output. 24

26 Table 7a: Sources of Industry Output Growth (in growth rate): Sector Industry number and name GO ConK ConL ConE ConM ConS ConII TFP Secondary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply Tertiary 17.Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons Note: GO means gross output; ConK, ConL and ConII mean contribution of capital, labor and intermediate inputs on gross output. 25

27 Table 7b: Sources of Industry Output Growth (in % share): Sector Industry number and name GO ConK ConL ConE ConM ConS ConII TFP Secondary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply unit:% Tertiary 17.Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons Note: GO means gross output; ConK, ConL and ConII mean contribution of capital, labor and intermediate inputs on gross output. 26

28 Table 8a: Sources of Industry Output Growth (in growth rate): Sector Industry number and name GO ConK ConL ConE ConM ConS ConII TFP Secondary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply Tertiary 17.Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons Note: GO means gross output; ConK, ConL and ConII mean contribution of capital, labor and intermediate inputs on gross output. 27

29 Table 8b: Sources of Industry Output Growth (in % share): Sector Industry number and name GO ConK ConL ConE ConM ConS ConII TFP Secondary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply unit:% Tertiary 17.Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons Note: GO means gross output; ConK, ConL and ConII mean contribution of capital, labor and intermediate inputs on gross output. 28

30 Table 9a: Sources of Industry Output Growth (in growth rate): Sector Industry number and name GO ConK ConL ConE ConM ConS ConII TFP Secondary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply Tertiary 17.Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons Note: GO means gross output; ConK, ConL and ConII mean contribution of capital, labor and intermediate inputs on gross output. 29

31 Table 9b: Sources of Industry Output Growth (in % share): Sector Industry number and name GO ConK ConL ConE ConM ConS ConII TFP Secondary 1.Agriculture, hunting and forestry Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals and fabricated metal products Machinery, nec Electrical and optical equipment Transport equipment Manufacturing nec; Recycling Electricity, gas and water supply unit:% Tertiary 17.Construction Sale, maintenance and repair of motor vehicles Wholesale trade and commission trade Retail trade, except of motor vehicles and motorcycles Hotel and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of m&eq and other business activities Public admin and defence; Compulsory social security Education Health and social work Other community, social and personal services Private households with employed persons Note: GO means gross output; ConK, ConL and ConII mean contribution of capital, labor and intermediate inputs on gross output. 30

32 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% Primary Secondary Tertiary Manufacturing 10.00% 0.00% Figure 2: Industrial structure of Taiwan: Figure 3a: Growth of Industry Value Added Figure 3b: Growth of Industry Value Added