In 1950, the gross domestic product of Taiwan, measured per person, placed it squarely in the third world. In 2012, this small mountainous island of 23 million people ranked 29th in the world, ahead of France, Japan, Finland, the UK and South Korea.
How did they do it? How did they create an advanced economy that produces most of the world’s silicon chips, motherboards, laptops and tablets?
I got a first-hand look during my Top7 site visits to New Taipei City and Hsinchu City in March. I saw a culture that values hard work, education, good order and long-term investment. But the real secret, the one that the rest of us can learn from, is how government at different levels manages to be activist on the one hand and flexible on the other.
In both cities, I was exposed to national government policies that promote very specific agendas. Taiwanese Intelligent Communities have some of the most impressive digital inclusion programs in the world because the central government requires private carriers to deliver high-quality broadband even to the remote villages of this mountainous land. The national government also wants every municipality or district to cultivate a culturally unique product or service – something arising from the history of that place – whether a particular style of meatball, traditional sky lantern or museum-quality art glass. That’s smart. Specialization creates commerce: I spend money to buy your meatballs and you spend money to buy my art glass.
Taiwan’s government also thinks global. I asked the deputy director-general of Taiwan’s oldest technology center, Hsinchu Science Park, what had made his “Silicon Valley” successful while nearly every other attempt to replicate California’s success has failed. Kuan-Hsiu Hsaio gave me a very interesting answer. “We did not build a science park just for Taiwan. We built it for the world.” Hsinchu Science Park is home to Taiwan Semiconductor Manufacturing, the company that invented the idea of the silicon wafer “fab,” which was spun out of a central government R&D organization.
The park is there, however, not only because of central government backing, but because Hsinchu leaped to assemble land, develop infrastructure and manage the continuing challenges of growth. And that is where the flexibility comes in. Central government policies no doubt create a lot of mandates and red tape, but the New Taiwan Buck stops at the local level. It was New Taipei City (NTC) that built the Yingge Ceramics Museum (pictured right) to help rescue a commodity ceramics industry and direct it to art and high tech production. It is NTC that organizes missions that take its ceramics artists and arts to conventions in Europe and the US to create an international brand for local products.
It is Hsinchu that devised a resident smart card that provides discounts in stores and can be loaded with money and act like a debit card in shops and transit – while capturing valuable data that helps local government plan transit routes, zoning and traffic patterns. (Mayor Hsu presented me with my own card when I visited.) It is Hsinchu that, with the help of central government training programs, guided manufacturers of glass and tile to open “tourism factories” that attract visitors and expand revenue opportunities.
What are the lessons we can take away? First of all, go to your local temple, light some incense and pray for clear, consistent and smart national policies. Second, don’t be afraid to act. When infrastructure is needed, when traditional businesses are losing ground, when cultural treasures are threatened, only local government can get it done.