After Chinas expected entry to the World Trade Organization WTO in the first half of 2001, Taiwan will likely follow. Despite some expected gains, entry to the WTO will inflict short-term economic pains in Taiwan, because the island will have to speed up structural adjustments. An investment hollow out from Taiwan to China will follow, as Taiwanese firms struggle to survive. This will lead to growth leakage and hurt employment in Taiwan in the short-term.
However, WTO will serve as an external lever for the weak minority DPP government to kick-start Taiwans much needed, but long ignored, structural reforms. Creative destruction under the WTO will strengthen the fundamentals for Taiwan...
