Industrial Diversification and Its Impact on Productivity Growth in Taiwan's Electronics Industry *

Show-Ling Jang, Ming-Hung Weng and Yanzhi Wang

Asian Economic Journal, 2005, vol. 19, issue 4, pages 423-443

Abstract: The present study attempts to link plant-level production diversification to productivity growth in Taiwan's electronics industry. An account of the role of the Taiwanese government over the last 2 decades leading to the take-off of its electronics industry is briefly discussed. We reviewed production activities of more than 20 000 Taiwanese electronics plants during the period 1992-1999. In an inter-industry comparison, we find that at the four-digit and seven-digit industry levels, Taiwanese electronics production plants exhibit a significantly higher degree of product diversification than plants in the manufacturing sector as a whole. Econometric results positively identify diversification as a source of significant productivity growth across all electronics plants classified in the related industry groups. Copyright 2005 East Asian Economic Association.

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