Taiwan's GDP follows int'l standards: minister
April 17, 2014, 12:00 am TWN
TAIPEI -- Taiwan calculates its gross domestic product (GDP) based on international standards and cannot do it any other way, the country's top economic planner said Wednesday after a local economist argued Taiwan's GDP measure was flawed.
Kuan Chung-ming (管中閔), the head of the Cabinet-level National Development Council said GDP is determined by a set of rules followed by the international community, and Taiwan cannot calculate it based on its own formula.
"In the future, should Taiwan's calculation of GDP become unique in the world?" Kuan asked, in response to a front-page story in the Liberty Times contending that Taiwan's GDP was inflated by overseas earnings that did not contribute to the local economy.
The story cited Chiou Jiunn-rong, an economics professor at National Central University, as saying that as a measure of domestic economic activity, GDP should only include economic output generated domestically or overseas earnings remitted home.
Taiwan began in 2005, however, to include in its GDP calculation the overseas earnings of Taiwan-based companies, even if they are not remitted back to Taiwan, Chiou said, according to the report.
That change made GDP a less reliable indicator of reflecting the country's true economic strength, the economist argued.
The story cited Chiou as saying that if the US$19.3 billion in overseas earnings Taiwanese companies reported in 2013, much of which was not remitted back to Taiwan, was left out of the GDP calculation, the country's GDP growth in 2013 would have been negative rather than growing at a 2.11 percent clip.
That was misleading, however, because it did not exclude overseas earnings from Taiwan's 2012 GDP, with which 2013 GDP was compared.
Overseas earnings reported by local companies rose US$1.99 billion (NT$59.09 billion based on prevailing exchange rates) in 2013, while real GDP rose by nearly NT$320 billion.