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THREAD. And now for something a bit different. In this week's edition of @globaltaiwan's Global Taiwan Brief, I write about the knock-on effects of accelerating demographic changes in Taiwan. http://globaltaiwan.org/2020/08/vol-5-issue-17/
Last week, @Focus_Taiwan, citing data from the National Development Council, reported that Taiwan's population will start shrinking this year. Moreover, "TW will become a super-aged society by 2025, meaning that 1 in 5 citizens will be aged over 65..." https://focustaiwan.tw/society/202008180025
This is bad news (even though we knew it was coming eventually). But even as Taiwan looks for ways to adapt to this new demographic reality, it might discover that there are silver linings to the NDC's new statistical forecast.
Why is it bad? There are a variety of reasons, but let me highlight just a couple of implications of the already extent labor shortage in Taiwan (the population aged 15-64 has been shrinking for several years).
In regards to national defense, fewer job applicants will demand better pay and perks, and military recruitment and retention will suffer for it. The result may well be a military that is undermanned and that does not include among its ranks Taiwan's best and brightest.
Economically, labor shortages will result in "GDP not created." Higher wages will put downward pressure on company profits, with implications for investment and economic growth.
But TW may find some silver linings. First, if Beijing anticipates that demographic trends will weaken TW's defense capacity, it will have good reason to continue delaying forceful unification. TW's demographic challenges may encourage greater patience from Xi Jinping (for now).
Of course, Taiwan is unlikely to stand pat in the face of these demographic challenges. Indeed, adapting to demographic decline, if not arresting it, could have follow-on effects, leading to a stronger, more secure Taiwan.
Perhaps the easiest way for Taiwan to address its demographic changes is to permit and encourage greater immigration. The domestic resistance to such a move *may* be less fierce than some might expect.
In places like Japan and S Korea, opposition to accepting more immigrants appears to be rooted, in part, in strong national identities based on shared ethnicity. This is less true for TW, as @SheenaGreitens and @aramhur argued recently for @ForeignPolicy. https://foreignpolicy.com/2020/07/02/why-taiwans-assistance-to-hong-kong-matters/
They describe a “civic basis” for Taiwanese identity: “rather than taking an ethnic or pan-Chinese approach, as it once did, Taiwan sees itself as a democratic nation, first and foremost.”
*In theory,* such a civic identity should make it easier for current citizens to embrace would-be nationals as long as the latter embrace Taiwan’s democracy.
OTOH, the recent Jeremy Lin hubbub leaves one less optimistic. https://www.taipeitimes.com/News/taiwan/archives/2020/08/21/2003742051
OTOH, the recent Jeremy Lin hubbub leaves one less optimistic. https://www.taipeitimes.com/News/taiwan/archives/2020/08/21/2003742051
Back to addressing the labor shortage. More immigration would do so. But beyond addressing that, more immigration could give the TW economy a helpful jolt. In a recent report, @EvanFeigenbaum addressed challenges to TW's "innovation ecosystem." https://carnegieendowment.org/2020/01/29/assuring-taiwan-s-innovation-future-pub-80920
One problem? "Bluntly put, a new generation of TW-based tech startups has yet to emerge. Indeed, while TW now has a vibrant and flourishing startup scene, few of these firms have agglomerated around new or fast-growing areas of science, tech, engineering, and mathematics (STEM)."
A potential reason for this deficiency is that Taiwan’s aspiring entrepreneurs are more isolated than in past decades. Feigenbaum: "With the United States, meanwhile, Taiwan saw diminished connections to Silicon Valley in the 2000s for two reasons...
"first, with more opportunities at home, fewer students from Taiwan came to the United States to study; second, Silicon Valley firms like Apple increasingly partnered with lower cost Chinese, not Taiwan, firms for their manufacturing needs."
Immigration may provide one solution to this deficiency. Peter Vandor and Nikolaus Franke of the Vienna University of Economics and Business, in seeking to explain why immigrants often account for an outsized share of entrepreneurial activity, found evidence that...
“cross-cultural experiences may increase individuals’ capabilities to identify promising business ideas” and that such experiences “may also stimulate creativity.” https://hbr.org/2016/10/why-are-immigrants-more-entrepreneurial
Taiwan’s high-tech ecosystem is not evolving on its own. But immigrants permitted entry due to growing labor shortages could end up giving that critical ecosystem—and the economy writ large—the boost it sorely needs.
There may also be a silver lining to be found in the national security realm. Shrinking populations in Taiwan and Japan should provide added impetus for the two to cooperate more closely here.
Tokyo has an interest in TW's de facto independence, but it has tended to hold TW at arm’s length. With demographic trends over time squeezing human & material resources and thus compounding the threat both face from China, a less cautious embrace may now be in order.
In THE FUTURE FACES OF WAR, @profsciubba identifies 3 ways countries might compensate for military manpower shortages: by pursuing tech superiority, alliances, and military efficiency. In all 3 pursuits, TW and Japan may find reason to work together. https://www.amazon.com/dp/031336494X/ref=cm_sw_r_tw_dp_x_DUPrFbX1PKHQJ
Contrary to expectations, Taiwan’s demography-induced security challenges could lead to a more secure Taiwan—one with stronger international security partnerships that contribute to deterring Beijing.
Taiwan would be better served by a healthy demographic profile marked by a younger, growing population. But if Taipei meets the challenge head on, it can still ensure itself a bright future—one in which it maintains its independent, democratic, and prosperous existence. /FIN
