2017 Index of Economic Freedom

Taiwan

overall score76.5
world rank11
Rule of Law

Property Rights86.5

Government Integrity70.5

Judicial Effectiveness67.7

Government Size

Government Spending89.5

Tax Burden75.3

Fiscal Health83.7

Regulatory Efficiency

Business Freedom93.4

Labor Freedom55.0

Monetary Freedom85.2

Open Markets

Trade Freedom86.2

Investment Freedom65.0

Financial Freedom60.0

Embed This Data

Create a Comparison Chart

See how Taiwan compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 23.5 million
  • GDP (PPP):
    • $1.1 trillion
    • 0.7% growth
    • 2.5% 5-year compound annual growth
    • $46,783 per capita
  • Unemployment:
    • 3.8%
  • Inflation (CPI):
    • -0.3%
  • FDI Inflow:
    • $2.4 billion
Embed This Data

Taiwan’s private sector has benefited from a relatively well-developed commercial code and open-market policies that facilitate the free flow of goods and capital. Small and medium-size enterprises have been the backbone of Taiwan’s dynamic economic expansion. A sound legal framework is in place to provide strong protection of property rights and uphold the rule of law.

Although institutional and economic fundamentals are in place, further reforms to increase competition and openness will be critical to sustaining the momentum for growth. The level of state involvement in the export-oriented economy remains considerable. Privatization and market liberalization are ongoing, but progress has been slow and uneven. The financial sector remains fragmented.

Close

Background

Taiwan is a dynamic multi-party democracy, and its economy is one of the richest in Asia. The Democratic Progressive Party returned to power when Tsai Ing-wen was elected president in 2016. As a result of the election and the economic slowdown in China, tourism, an important source of economic growth, has declined. Taiwan is excluded from membership in the United Nations, other international organizations, and a variety of free trade arrangements as part of Beijing’s efforts to pressure it into unification. Although internal opposition to engaging with China is considerable because of fears that sovereignty will be lost, recent economic arrangements bind the island closer to the mainland.

Rule of LawView Methodology

Property Rights 86.5 Create a Graph using this measurement

Government Integrity 70.5 Create a Graph using this measurement

Judicial Effectiveness 67.7 Create a Graph using this measurement

Property rights are generally protected, and contracts are enforced effectively. The judiciary is independent, and the court system is largely free of political interference. Although corruption is much less prevalent today, it remains a problem. Politics and big business are closely intertwined, and this leads to malfeasance in government procurement. In November 2015, a former New Taipei City deputy mayor was charged with taking $230,000 in bribes.

Government SizeView Methodology

The top personal income tax rate has been raised to 45 percent. The top corporate tax rate is 17 percent. Other taxes include a value-added tax and an interest tax. The overall tax burden equals 12.3 percent of total domestic income. Government spending has amounted to 18.7 percent of total output (GDP) over the past three years, and budget deficits have averaged 2.9 percent of GDP. Public debt is equivalent to 38.3 percent of GDP.

Regulatory EfficiencyView Methodology

The overall freedom to conduct business is relatively well protected under the transparent regulatory environment. The nonsalary cost of employing a worker is low, but regulations on work hours are not flexible. Taiwan law mandates price controls on electricity and salt, and the government regulates prices for fuels and pharmaceutical products. Other prices are determined largely by the market.

Open MarketsView Methodology

Trade is extremely important to Taiwan’s economy; the value of exports and imports taken together equals 111 percent of GDP. The average applied tariff rate is 1.9 percent, and some agricultural imports face additional barriers. Foreign investment is screened, and investment in some sectors is restricted. The financial sector continues to evolve, and the stock market is generally open to foreign participation. Foreign banks play a relatively small role.

Country's Score Over Time

View Chart of Scores over Time

Regional Ranking

rank country overall change
1Hong Kong89.81.2
2Singapore88.60.8
3New Zealand83.72.1
4Australia810.7
5Taiwan76.51.8
6South Korea74.32.6
7Malaysia 73.82.3
8Macau70.70.6
9Brunei Darussalam69.82.5
10Japan69.6-3.5
11Kazakhstan695.4
12Vanuatu67.46.6
13Thailand 66.22.3
14Philippines65.62.5
15Azerbaijan63.63.4
16Fiji63.44.6
17Tonga633.4
18Indonesia61.92.5
19Kyrgyz Republic 61.11.5
20Cambodia59.51.6
21Bhutan58.4-1.1
22Samoa58.4-5.1
23Tajikistan58.26.9
24China57.45.4
25Sri Lanka57.4-2.5
26Nepal55.14.2
27Solomon Islands558.0
28Bangladesh 551.7
29Mongolia54.8-4.6
30Micronesia54.12.3
31Laos544.2
32Pakistan 52.8-3.1
33India52.6-3.6
34Burma52.53.8
35Vietnam52.4-1.6
36Uzbekistan52.36.3
37Papua New Guinea50.9-2.3
38Kiribati50.94.7
39Maldives50.3-3.6
40Afghanistan48.9N/A
41Turkmenistan47.45.5
42Timor-Leste46.30.5
43North Korea4.92.6
See Entire Region List ›

View all countries ›

Back to Top