Unexplored, Unsaid
Areas worthy of further investigation in Taiwan
Taiwan is one of the most fascinating places on the planet. Whether due to geography, diplomatic isolation, or language barriers, Taiwan’s public sector has had relatively limited interaction with the rest of the world for much of its recent history. The more senior the public official, the more isolated they’ve been1. The result is a society with unique institutions, processes, regulations, and professional standards. Thus, travelling to Taiwan as a public sector professional is perhaps a bit like an artist discovering the existence of an independent tradition, complete with its own styles, references, and layers of meaning2.
I’ve previously covered Taiwan’s world-class underground metro, its housing crisis, the curation at the National Museum, ‘smart cities’, daily family life, the context gap in professional communication, and a brief primer on cross-strait relations. Unfortunately, with only three months in the country, my time split by commitments to my family and role back home, I could only cover a small fraction of what deserves to be more widely known.
In New Zealand, your position and a bit of charm are usually enough to open doors at a similar level to your own. Confidence is the key in the USA. In Taiwan, you need someone to open the door for you. I found my title, NZ Government email address, and even sponsorship by the Taiwan Ministry of Foreign Affairs, all had very little power compared to an introduction from somebody they met at a conference a few years prior. Working in Taiwan is therefore a game of networks and momentum.
Starting with little of either, and each day bringing my deadline a little closer, I was forced to reconsider my objectives. Rather than the deep investigation of Taipei’s digital practices I’d originally set out to write, I instead went broad, pulling at every thread hoping enough would unravel to enable me to map the broad areas of professional interest by the time I left3. If some of you reading this find my ‘maps’ of use, perhaps spurring some deeper research into or copying Taiwanese practice, then I’ll consider my trip a success. Here then are the other sectors where Taiwan is doing something world-leading or noteworthy, but that I lacked the time to explore as fully as I’d have liked.
Healthcare
Taiwan’s life expectancy at birth is 81.2 years, higher than the US at 79.3, and comparable with the likes of Denmark and the United Kingdom at 81.5 and 81.9 respectively. What’s truly impressive here is that this is achieved with a fraction of the spending. The USA spends around 17% of GDP on healthcare4. For Denmark, the UK, and much of the OECD, healthcare spending is typically around 9-12%. Taiwan spends just 6.6%. After accounting for Taiwan’s lower nominal GDP per capita5, the West is spending roughly 70% more on healthcare for similar life-expectancy outcomes6.
Even this undersells the efficacy of the Taiwanese healthcare system as it only accounts for lifespan outcomes and monetary costs, leaving out quality of life and waiting-time outcomes. Most medical conditions are not life-threatening but can have considerable quality-of-life impacts if left untreated for long periods due to lengthy wait times. Queue times at the Emergency Department of our regional hospital here in New Zealand average around eight hours, even with an urgent referral from a GP. Surgeries wait lists can stretch out months, or even years for some conditions.
In Taiwan, patients are triaged within 1 minute of arrival at the ED; non-critical patients will typically see a doctor just over 7 minutes later. The average time to see a specialist (if required) is just 25 minutes after arrival. The situation is similar outside the ED as well. Specialists will usually have no waitlist, and patients can see anyone they wish during working hours. The same trend is evident for elective surgeries, as you can see below:
Each year, the Taiwanese government quango ‘Health Smart Taiwan’ publishes a book highlighting what they judge to be the most outstanding results from the myriad ‘smart’ (i.e. digital technology) innovations and experiments delivered within the past year. Last year’s book contains 70 such innovations. They range from dozens of different AI models which improve diagnosis speed and accuracy, to labour-saving systems for blood collection, classification, and routing.
China Medical University Hospital developed an antibacterial prediction model that reduces testing time from 72 hours to 1, predicts bacterial resistance, and has reduced medication errors by 60%. Kaohsiung Siaogang Hospital’s AI has cut dialysis hypotension incidence by two-thirds. There are tales of ‘smart hospitals’ using big data and linear programming to reduce staff workloads and patient throughput, highlighting a 40% reduction in operating room delays. Other hospitals are experimenting with remote surgery, allowing specialists in the cities to provide urgent care to isolated communities. More than any one particular advance, it’s the breadth and pace of innovation across the healthcare sector that’s truly impressive to me.
Given the above, it should be no surprise that Taiwan is often rated as having the best healthcare in the world. Its 92% public satisfaction rating is higher than anywhere in the OECD (The Netherlands rate highest 90%). However, the system has come under increasing strain in recent years as the population ages. Ever greater demand is being placed on a shrinking base of young doctors and nurses. As a result, consultation times with each patient are short, work hours are long, and labour shortages are looming.
Taiwan’s problems now are our problems a generation from now. So, whether looking to innovate and make marginal improvements to service or explore alternative healthcare models, policymakers would do well to examine Taiwan closely.
Artificial Intelligence
As you might expect from the nation that makes the hardware, Taiwanese society is deeply engaged with AI, embracing the opportunities without being naive to the challenges. One of the findings that first impressed me about Taiwan was learning how early they’d been engaging with the issue of individual privacy and liberty in the age of widespread data collection and increasing capacity to make this data legible. Returning to the country, AI is everywhere - the medical system, city bureaucracies, manufacturing. I learned about specially designed systems on the train network taking in mountains of vibration, speed, and other data, and making early inferences about maintenance needs and potential safety issues.
What impressed me most however was the engagement from the arts. Where the response from the West has been somewhat tepid, many Taiwanese are very excited about the potential of generative AI (e.g. chat, image, video). We saw huge projections of AI art on buildings during public events, AI-powered interactive funhouses for kids, and, most interestingly, turning over the entire Taipei Museum of Contemporary Art to an exploration of the idea that “AI can augment human creativity and productivity, and opening up new realms of innovation and prosperity”.
Every technology since Ug the Smart’s first stone tool has changed the nature of work, and our relationship with the world around us. The majority of our ancestors were peasants engaged in backbreaking labour, living short lives in abject poverty. Thanks to the plough and combine harvester, very few work in agriculture today (and typically in much better conditions), freeing time and ingenuity for broader goals - exploring the nature of the universe, curing cancer, and inventing new forms of human expression.
Opposition to change often has a natural constituency of those comfortable with the status quo. Societal benefits are often spread across the entire population, and take time to be fully realised. Thus, Luddism is perennial. It’s disappointing, but understandable, to see ill-considered bans on self-driving trucks, Generative AI, and various other applications of machine learning. Wonderful to see Taiwanese so evidently excited by the opportunities AI presents, without being naive to privacy concerns, or other potential pitfalls.
ITRI
The Industrial Technology Research Institute (ITRI) is Taiwan’s state-sponsored technology research and development incubator. Founded in 1973, ITRI developed much of the fundamental technology behind modern chip manufacturing. TSMC itself started as an incubator project there and went on to become a world-beater.
More recently, the institution has received criticism for no longer producing the same sorts of paradigm-shifting advances that it once did. In its defence, the institution still produces a wide array of innovative products, even if these are more incremental in nature. ITRI is also key part of the talent development pipeline providing highly-trained engineers to Taiwan’s tech sector. Testimonies from former employees on Glassdoor make for fascinating reading, emphasising great work/life balance and a friendly working environment, but also the low pay and difficulties in securing funding. These, of course, should be read in the context of Taiwanese society, where work/life balance often involves extreme hours and presenteeism. Is the culture lax then, or functional? Is there a genuine lack of funding for great ideas, or is the institution simply parsimonious with public funding? Is ITRI still a relevant institution that has changed and evolved its role over the years, or is it mostly coasting on its former glories? Either way, clearly an underexamined case study, particularly for those interested in publicly funded science and R&D.
Family Policy
Most people will be familiar with China’s infamous ‘One Child Policy’, and readers of this blog will know similar policies were enacted throughout large parts of Asia. Taiwan was no exception. Influenced by ‘population bomb’ concerns about overpopulation7, alongside the idea that further population growth would act as a drag on economic growth and prosperity, Taiwanese planners through much of the late 20th-Century conducted an extensive and escalating programme of family planning, the consequences of which are reverberating today.
Efforts to reduce the Taiwanese birthrate began in the 1950s. These were sporadic, largely focused on lower and rural classes, and were conducted largely by NGOs with only tepid government support. Organisations such as the China Family Planning Association worked to promote contraception and family planning, and were supported financially and via technical advisors by the ‘Population Council of New York’, who also worked to build a consensus among policy makers. In 1964, these early efforts began to pay off, and the Taiwanese government started to get in on the act, funding an island-wide program of distributing IUDs.
“Reality and economic theory clearly show that the higher the rate of population growth, the more difficult is the task of raising per capita income and sustaining economic growth8”
-Salter, C. L., 1963. “Taiwan’s Economic Need for a Population Policy.” Industry of Free China, Taipei, ROC, May 1963
“… For every 31 people employed, there are 69 people not economically active… the past decade of economic progress has still not succeeded in utilizing a greater proportion of the inactive segment [i.e. the population and economy were still growing in lockstep at this time]… it is valid to say that Taiwan has a surplus population”
-Excerpt from keynote at the ‘Conference on Population and Economic Development’, hosted in Taipei in 1976 by Academia Sinica.
By the 1980s, contraceptive efforts were widened to an enormous programme delivered through the media, education and health systems promoting the benefits of having fewer children and later marriages. Import tariffs on contraceptives were eliminated, and subsidies enacted. Child allowances were discontinued for government employees after the birth of a second child. These efforts were rewarded. Between 1965 and 1980, preferred family size dropped from 4 children to 2.8, and the birth rate dropped 30%.
Unfortunately, once a culture of children is dismantled, it usually continues to fall. The government had targeted a crude birth rate (their preferred measure - essentially the number of births divided by the total population) of 1.9% by 1989. but had fallen to 1.1% by 1986. Today it sits at 0.58%, and still falling. Each generation is half the size of the previous. Even as late as 1998, influential public figures such as Li Kuo-ting ‘The Father of Taiwan's Economic Miracle’ continued to call for stronger efforts. Taiwanese women were having just 1.6 children and falling, but the view of many continued to be that “population policy and a family planning program [were] urgently needed.”9 Despite some tepid policy efforts to reverse the decline, many restrictive policies such as the ‘Genetic Health Act’, first enacted in 1984 to promote eugenics and control fertility, remain in place. One consequence is that women cannot use their previously frozen eggs unless married - a bizarre anachronism out of step with both the scale of their crisis, and the country’s reputation as one of the freest nations on Earth.
Curiously, TSMC stands apart here. Their Taiwanese workforce accounts for a staggering 1.8% of births in Taiwan (and growing quickly, up from 1.4% in 2019), despite being just 0.3% of the population. After adjusting for demographic differences, I estimate10 that TSMC employees have 2.8x more children than the national average, giving a TFR of around 2.45 children per woman. [Thanks to the reader who pointed out I’d unfortunately failed to account for non-TSMC spouses in my calculations. I don’t have good data on how many TSMC kids have both parents working for the company, but I now estimate TFR of around 1.5 - still noteworthy compared with the dire situation nationally, but not nearly as internationally significant as I once supposed]. Note even 1.5 is still an extreme anomaly when every statistical indicator at TSMC otherwise predicts lower-than-average fertility. Employees are overwhelmingly urban, highly educated, irreligious, work long hours, and have a 2:1 skew in gender ratio - all of which would predict lower fertility than the Taiwanese average.
Recognising the company’s future is dependent on its ability to continue to employ talented Taiwanese staff11 (and retain current staff through the high pressures of Taiwanese parenthood), TSMC runs a ‘Child Care Benefit Program’ providing various incentives and subsidies for new parents, including 10 days paternity leave, 12 to 20 weeks maternity leave (both unpaid), and on-site age 2-6 childcare facilities12. All of this has been tried elsewhere, usually to little effect. Indeed, the benefits are ‘inferior’ to those granted in New Zealand by the government (e.g. 26 weeks paid maternity leave, 20 hours free ECE) - yet TSMC has significantly higher [similar, but growing] fertility compared to NZ (currently 1.56 and falling rapidly).
Marginal improvements to the economics of having children doesn’t significantly change fertility13. What TSMC has managed to do via this programme, and top-down reinforcement from management, is recreate a culture of children internally where having a family is normalised and where one’s peers are all taking pride in having lots of kids. Given how resistant raising fertility has been to policy intervention, the case of TSMC is clearly worth further investigation.
Small Businesses
Taiwan has the most extraordinary array of small businesses. Every street is full of cute little cafes and restaurants, bookshops, art galleries, and small family offices. Grandmothers selling noodles from little holes in the wall, young entrepreneurs pursuing their passion project to run a 6-seat Japanese-style Izakaya, or run a small studio in Zhongshan for their artist friends. The life and variety these places bring to the streets are part of what makes visitors fall in love with Taiwan.
Taiwan’s commercial vibrancy is made possible by two key factors. First, mixed-use-by-default zoning means, unlike New Zealand, the USA, and much of the West, commercial property is not segregated into certain centrally-planned locations. Instead, virtually every building on every street has commercial premises on the ground floor, with more shops or residential above, depending on the location. Thus, while large-scale ‘Grade A’ commercial properties are similarly priced to comparable Western cities, lower-end premises for retail, offices, or hospitality are less than half the price of comparable spaces abroad14.
The government has worked to make starting a business as easy as possible. Over the past two decades, the government has made steady improvements to its permitting offices, regulatory environment, and contract enforcement. There’s now a one-stop shop for businesses that can arrange everything they need from registration, permitting, taxes, and organising utilities. The main remaining difficulties are a woefully inefficient banking sector, and difficulties with international trade arising from Taiwan’s diplomatic isolation.
Starting a small business is even easier than the official reports suggest. It’s an open secret that at the very smallest scale you can just… start. Buy a cart, or rent some space, and start selling your product. If you’re successful, you’ll be approached to register, start paying tax, and so on, without penalty. So, in practice, Taiwan has ‘lemonade stand’ level barriers to entry, enabling budding entrepreneurs to risk little in experimenting with their weird and wonderful passion projects.
As this will be the last of this series of essays on Taiwan, I’d like to thank everybody who supported me during our stay in Taipei, particularly Taiwan’s Ministry of Foreign Affairs for their sponsorship, National Taipei University’s generous hosting, and of course our friend Sandy, without whom this would not have been possible.
To give you a sense of this isolation, Chiang Ching-Kuo, son of Chiang Kai-Shek, and President of Taiwan from 1978 until his death in 1988, only left the country once, visiting Singapore in 1983. Lee Kuan Yew recounts in his memoirs that Ching-Kuo came to rely on Lee’s regular visits for information about developments abroad, particularly viz. the USA.
You can read my review of LKY’s fascinating memoirs by clicking the link below:
Extending the metaphor: while two artistic traditions might have different forms, canons, and techniques, the fundamentals are always the same. Everywhere art is beholden to the laws of physics and the universals of human perception and experience. Light and darkness; life, death, and taxes. The coarser dynamics of bureaucracies are similarly written in the stars. Problems with coordination. Misaligned incentives. Moral mazes. I heard, for example, many familiar stories in Taipei of small teams delivering widely-lauded changes only for progress to grind to a halt, mired in risk-averse process, when key political support moves on. Art is to create within these limitations.
I feel a certain sense of tragedy that many of these threads only started to truly unravel in the final weeks of my visit. In many cases, I’d have found a great first contact in a given area by late January, but we’d be unable to arrange a meeting until after mid-February due to the Chinese New Year holidays. In some cases, there were further unavoidable delays. We’d meet, hit it off, and they’d recommend me to their network. Weeks later, I’d be speaking with an individual in the organisation, but I’d need to meet and impress them before finally being put together with the technical expert or SVP who I’d first emailed in 2023 before leaving for Taiwan, but not heard back from until now. Their schedules were inevitably full, so it sometimes wasn’t until late March that I was finally able to sit down with the people I’d hoped to start with. They’d offer to make various other fascinating connections for me, but alas, our flight out was in a matter of days, and I’d be unable to follow up.
To be fair this relatively high figure is partly because the USA, in effect, subsidises medical R&D (and drug discovery in particular) for the rest of the world. The US, as a result of its large population and economy, is the single largest market for drugs in the world. Further, favourable patent laws grant a 20-year monopoly in the US on any new drugs that pass through the extremely onerous and expensive trials and approval process. Consequently, nearly half of all drug discovery globally occurs in the USA. When considering just novel structures and mechanisms (as opposed to minor variations on existing drugs), almost all discovery globally occurs within the USA, financed by its deep capital markets and paid for by American consumers.
After 20 years the patent expires. Countries like New Zealand can then purchase ‘generic’ off-brand formulations at a price far below what’s necessary to recoup research and development costs and thus incentivise the drug to ever be developed. Essentially, the US people pay handsomely to be first to receive novel treatments, and then everybody else gets to benefit.
In nominal terms, Taiwan has a GDP per capita of ~$32,000 USD. However, after adjusting for the purchasing power of Taiwanese wages within Taiwan, PPP estimates range as high as $65,000 USD. While such a disparity is often seen in developing countries with low wages and large informal economies, such a large gap between GDP and PPP is extremely unusual for an economy as developed as Taiwan, and is a reflection of the extreme efficiency of Taiwanese healthcare, public sector, and broader economy - as I first discussed here.
Note that while Taiwanese are relatively wealthy within Taiwan, New Taiwan Dollars don’t go nearly as far outside of Taiwan, making tourism and imports expensive. This includes foreign-manufactured drugs, meaning Taiwan is constrained in its ability to source non-generics within budget.
One such area of efficiency is administrative spending. Taiwan spends just 0.8% of its total healthcare spending on admin (progressively improved from around 2%, the most commonly cited figure, in the mid-00s). By comparison, the OECD averages 3%, for a level of service that is at least no better than what’s provided by, for example, the highly-regarded Health IC Smart Card system.
‘The Population Bomb’ is a famous book published in 1968 that claimed overpopulation would soon cause mass famines. The opposite has turned out to be true; calorific intake has risen considerably since, and famines are thankfully largely a thing of the past, unless caused by war or natural disasters. Nevertheless, the book was highly influential at the time, spurring a raft of public policy responses that in some cases continue to this day.
This is true over shorter timescales, but misses that the reason growth is slower is because people are investing in future generations!
Li, Kuo-ting, “The evolution of policy behind Taiwan’s development success”, Yale University Press, New Haven and London, 1998.
Comparing TSMC fertility with Taiwan as a whole is an unfair comparison since TSMC employs no children, and few elderly individuals. I arrived at the figures above by taking TSMC’s self-published demographic data, adjusted for the Taiwanese-based proportion of the workforce, and compared that with Taiwanese age bracket data here. It’s not perfect, since TSMC’s published age brackets are quite broad, but it gives the general idea.
This is particularly evident in their recent decision to extend the schooling benefits to partner organisations, and has plans to expand the scope further to all companies in the science parks where TSMC operates.
These seem to be far superior than the standard preschools available to the general public, with a world-class circumulum, the best elements of Western ECE standards, and regular parent-child activities.
As an extreme example: Hungary under Orbán has been spending 4-5% of GDP on various child subsidies and tax incentives, but has only managed to lift TFR from 1.3 in the early 2000s to 1.6 today.
Unfortunately, I’ve been unable to find any robust study of this section of the Taiwanese commercial real-estate market. Instead, the estimate provided above is merely to give readers a sense of the relative costs for starting out, and is based on a survey of roughly comparable properties listed for lease here, and here in Taipei and New Zealand respectively. The types of properties available as different as the cities themselves, but I’m looking at properties of roughly 100sqm (~30ping), outside of prime locations, and in need of a lick of paint. You can get such a space in Taipei for around $10USD/sqm/month, whereas a similar space in even regional cities like Whangarei start at $25, with prices going up from there.
This has been a great series. Lots of insight and interesting perspectives on Taiwan.
Lovely essay, as always.
Typo: I assume you meant "spurring some deeper research.." and not "spurning" :)