This year marks the 20th anniversary of The Heritage Foundation/Wall Street Journal’s Index of Economic Freedom. It also marks the 35th year of a piece of legislation near and dear to the mission of The Heritage Foundation—the Taiwan Relations Act.
Taiwan last year had one of the largest increases in economic freedom, according to the 2014 Index, among “free” and “mostly free” countries. This has allowed Taiwan to move up their ranking from 20th in 2013 to 17th in 2014. Taiwan’s ranking has secured its spot as the fifth most free in the Asia–Pacific region once again, behind New Zealand and in front of Japan.
While Taiwan is still lagging behind in regulatory labor freedom and government fiscal freedom, it continues to flourish in regulatory business freedom and monetary freedom. Investment in Taiwan has continued to thrive this past year, and government spending has been kept low.
Despite constant spats with neighboring countries over highly sensitive territorial issues in the South and East China Seas, Taiwan has been ranked the world’s “third best investment destination” by a recent Business Environment Risk Intelligence report.
And though Taiwan’s tariff rate is at an average of 2.1 percent, President Ma Ying-jeou has shown a strong interest in deepening the nation’s integration into the regional economy by joining the Trans-Pacific Partnership (TPP). Joining the TPP would be a huge step up in Taiwan’s trade liberalization.
Taiwan has had continued growth in economic freedom over the past five years, and if it were to join the TPP, it would become an even more competitive national economy within the Asia–Pacific region. In turn, a stronger economy means a Taiwan that is in better control of its own destiny and able to withstand the political pressures from China. Particularly in this 35th year of the Taiwan Relations Act, the connection between economic performance and Taiwan’s security is something to keep in mind.
