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Comparative Advantage - Taiwan - a Microchip Superpower

Geoff Riley

26th October 2022

BBC Newsnight launched their Newsnight Global programme last night and the special on Taiwan was superb. Within it was a segment from Economics Correspondent Ben Chu on Taiwan's status as - far and away - the leading manufacturer and exporter of microchip production. It has dozens of high-scale "foundries" making a huge contribution to their economy.

This is a superb applied example to use of the out-sourcing of production but also the complex interplay of global economics and geo-Politics. Please do have a look at this short report from Ben Chu.

Here is the pattern of trade (for goods) for Taiwan - drawing on 2020 data and produced by The trade data shows the scale of Taiwan's revealed comparative advantage in producing micro chips. In 2020, Chinese Taipei exported a total of $374B, making it the number 10 exporter in the world. Integrated circuits accounted for 37% of their exports of goods in 2020.

Taiwanese pattern of trade

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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