Evaluation of the Relative Impact of Fiscal Incentives and Trade Policies on the Return to Manufacturing in Taiwan, 1955-1995

Glenn Jenkins () and Chun-YAn Kuo
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Chun-YAn Kuo: Department of Economics, Queen's University, Kingston, Ontario K7L 3N6, Canada

No 1997-02, Development Discussion Papers from JDI Executive Programs

Abstract: This paper examines the relative impact of tax incentives, trade policies, financial subsidy, real wage and real exchange rate on industrial investment and economic development over the past 40 years in Taiwan using an integrated cash flow model of industrial investment. The model is developed in such a manner that the movements of all the policy and microeconomics variables are allowed to interact with each other in the economy. The result show that trade and macroeconomic policies are much more important than income tax or subsidized finance policies for the successful industrialization in Taiwan. The effects of the tax incentives and financial policies are minor in comparison with the impact of the fundamental trends in the microeconomic variables, such as the movement of the real exchange rate and the real wage rate.

Keywords: : Industrialization; trade Policies; financial subsidy; economic development; Taiwan (search for similar items in EconPapers)
JEL-codes: L5 O1 O2 (search for similar items in EconPapers)
Pages: 57 pages
Date: 1997-02
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