Taiwan is flying high again, buoyed by its strong performance in the semiconductor industry. It is certain to overtake South Korea in terms of per capita GDP this year for the first time in 19 years. Last week, Taiwan President Tsai Ing-wen told a meeting of her Democratic Progressive Party that her country's GDP per capita will exceed $36,000 this year. Korea's per capita GDP was projected at $34,990.
Korea began surpassing Taiwan in 2003 and the gap has since continued to widen. But the difference has become narrower over the last five years and the island country is poised to catch up this year. Tsai said Taiwan seized the opportunity presented by the global supply chain restructuring while successfully fighting the COVID-19 pandemic. The Taiwanese economy grew 3.4 percent in 2020 and 6.3 percent last year. However, the South Korean economy contracted 0.9 percent in 2020 before managing to grow 4 percent in 2021.
Without a doubt, Taiwan's comeback has been attributed to enterprises. TSMC, the country's flagship company, has led the economy by occupying half of the world's non-memory foundry market. Its market capitalization surpassed Samsung Electronics' in November 2019. Last year, semiconductors accounted for 37 percent of Taiwan's exports and 17 percent of its GDP.
It was none other than Tsai who prompted Taiwanese companies to run again. She wooed businesses back to the country, offering a comprehensive financial and tax support package. In contrast, our companies regressed under the Moon Jae-in administration. The National Assembly passed a special law on semiconductors in January this year, but companies' wish to increase the enrollment quotas of university semiconductor departments in the Seoul metropolitan area was not realized. Their desire to make the 52-hour workweek system flexible for them was rejected, too.
Taiwan has already set an example by showing how to revitalize the economy. The incoming Yoon Suk-yeol administration should learn the lessons from the policy failures of the outgoing Moon government and ease regulations and nurture talent in the high-tech industry.