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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 24, No. 2, pp.171-195
ISSN: 1225-0279 (Print)
Print publication date 30 May 2011
Received 27 Oct 2010 Revised 13 Dec 2010 Accepted 21 Mar 2011

Political Economy of Cross-Strait Investments: The Taiwanese High-tech Industry as an Example

Hsiao-hung Nancy Chen
Distinguished Professor, Department of Sociology, National Chengchi University, No. 64, Chih-Nan Road, Section 2, Taipei, 116, Taiwan, Tel: +886-2-22349817, Fax: +886-2-22349817 nkchen@nccu.edu.tw

JEL Classification: F21, F59

Abstract

The data analyzed in this paper revealed that Taiwanese high-tech companies that invested in China have grown larger. Industrial clusters have been established in the Greater Shanghai area and to a lesser extent, along the Shenzhen-Dongguan-Guangzhou corridor. These clusters were established along the principles of vertical differentiation. Will the post-ECFA China-Taiwan relations create the “Chiwan” phenomenon or will it present Taiwan with a “prisoner’s dilemma”? The paper proposes that in taking advantage of China’s huge domestic market, Taiwanese high-tech enterprises should maintain their comparative advantage in the world ICT market. In terms of production functions, aside from capital, innovation-driven human resource is perhaps equally, if not more, important in maintaining enterprise profitability and sustainability.

Keywords:

ECFA, High-tech industrial cluster, “Chiwan” phenomenon, Prisoner’s dilemma, Peace dividend, Cross-Strait relations

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