The Effect of Manufacturing Industry Investing in China on the Taiwan Economy

• Main Authors: Meng-Yi Chen, 陳孟宜
• Other Authors: Chao-Hsiung Lin
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/q64vm5

碩士 === 銘傳大學 === 經濟學系碩士班 === 95 === The main purpose of this study is to build up model. We utilize the Ordinary Least Square method to investigate the determinants of choice of the Taiwanese enterprises’ foreign direct investment (FDI) in Mainland China. And we use four indexes to check whether Taiwan has Hollowing-out. Our empirical results show that GDP of China has positive effect significantly on manufacturing industries in Taiwan. If China has more GDP, it indicates China has a larger economy scale and market size. This will make more Taiwanese businessman invest in China. The total trade between Taiwan and China has positive effect significantly on manufacturing industries. More trade between Taiwan and China mean higher degree of market consolidation. That makes Taiwanese businessman increase their investment in China. Exchange rate also has positive effect significantly on manufacturing industries. We think China’ monetary policy causes fluctuation of exchange rate and it may affect Taiwanese businessman investing in China. We find wage of China has negative effect significantly on manufacturing industries. This means that lower wage of china will make Taiwanese businessman invest more in China. We use four indexes to check whether Taiwan has Hollowing-out. We have the following result：1. The share of output value of Manufacturing Industry is decreased apparently in GDP. 2. Unemployment rate increases year by year. 3. FDI of Manufacturing Industry net outflows has increased. 4. Labor productivity increases steadily year by year, but growth rate decreases. Four indexes show that Taiwan has hollowing-out authentically. We think the government should set up China policy aggressively and improve macroeconomic environment in Taiwan. And the government should have good policies to attract foreigner and Taiwan’s manufacturer investing in Taiwan. Finally, the government and business need to make advantage of global recourses to face globalization and regional integration.