Private enterprises have increased their share of industry so that in 1992, 82% of total industrial production originated from the private sector with small and medium-sized firms dominating industry (Economist Intelligence Unit, 1994).
Despite attempts to diversify into Europe, Japan and even Eastern Europe and Russia, Taiwan's export market remains heavily dependent on the US which took 27.6% of exports by value in 1993 and accounted for 85.5% of the trade surplus. Recently Taiwan has been attempting to expand its trade with mainland China which in 1992 was estimated at 7.5% of total trade. Taiwan's government is also attempting to cut its deficit on trade with Japan, which by far remains the largest source of imports (Economist Intelligence Unit, 1994).
Until 1988 Taiwan's trade and current-account surpluses had risen each year since 1986, peaking respectively at $20.3 billion and $18 billion in 1987. By 1993 the trade surplus had shrunk to US$11.4 billion and the current-account surplus to $6.2 billion.
Until 1984, when it prepaid some of its external medium- and long-term debt, Taiwan also had positive long-term capital flows. Capital inflows combined with current-account surpluses resulted in the large build-up of foreign exchange reserves, which reached $87 billion at the end of May 1994 (Economist Intelligence Unit, 1994).
In 1993 8.7 million civilians were employed, representing 98.5% of the labor force. Taiwan reportedly has had virtually full employment for over a decade with most of the labor force concentrated in manufacturing. Taiwan, during the past ten years, has also meet with considerable success in battling inflation. Because the country is highly dependent on imports of raw materials, especially energy, it is vulnerable to external price shocks. Consequently inflation has been highest in those years with substantial oil price increases. After the oil price started to fall Taiwan had minimum infl...