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May 28, 2017

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Critical thinking, entrepreneurs may be key to economic growth

The surprising increase of year-on-year exports in September may have eased some worries about Taiwan's economic condition, but so far the government still does not have a concrete plan for stimulating the economy.

In the past, Taiwan's government devoted sizeable resources to one particular industry — electronics, making it the engine for economic growth.

Taiwan Semiconductor Manufacturing Company Limited (台積電) is one successful example of this strategy. This model, however, may not be suitable for solving the current crisis as no single industry looks promising enough for the government to focus its investments.

Not all countries facilitate their economic growth in such a manner, and there is an alternative way for Taiwan.

People may have different explanations for the fact that people are paid on average less in Taiwan than in the U.S. Some economists explain it as a factor of efficiency: a given person in Taiwan with the same effort simply creates fewer things of equivalent value compared to those in the U.S.

Based on a survey by Akamai, a world leader in content delivery, broadband communication in Taiwan in 2011 was considered the slowest of all Asian countries. So, Taiwanese companies relying on broadband communication may see a drop in efficiency compared to an equivalent firm outside the country.

At the heart of this is the notion that one company's success influences the efficiency of other firms. Better telecommunications mean more productivity down the line in other industries. Comparatively worse telecommunications, as in, say, Taiwan, mean comparatively worse productivity for other Taiwanese firms.

In a well functioning economy, when services provided by some companies are far from optimum, others will arrive offering better services, thereby creating competition. As a result, companies that are more efficient will replace others. Through this process the economy will grow. Creating an environment conducive to this change in Taiwan can increase the economic outcome of this country.

Taiwan should start looking for where it can improve its efficiency, and be entrepreneurial enough to make a change. Instead of dubbing the younger generation the "strawberry generation" — the generation that cannot handle social pressure nor work hard like their parents' generation — society should try listening to the voices of this age group. Criticisms and complaints aimed at the status quo are not always baseless. Some hold in their core the possibility for positive change.

Moreover, people who point out productivity-sapping inefficiencies should do more than just make complaints. Some successful start-up companies are formed by former employees not satisfied with the condition of older firms in the same industry. Since these people cannot institute change when in these corporations, they part ways, deciding instead to open new ones. Putting this idea into practice is the best way to convince people of its merits.

The government may still not have a concrete plan for saving the economy, but there remains room for companies in Taiwan to improve their efficiency and for the economy to grow. The general atmosphere in Taiwan does not value critical thinking. Critical thinking, however, might just be where the improvements start. It requires society to learn to view criticisms in a positive way, and people in society to be more entrepreneurial. This is the way that such economic growth may take place.

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