In view of the increasingly close economic relations between Taiwan and the China mainland, the present study aims to provide a quantitative assessment for the impact on Taiwan’s production and income distribution. The study will be first performed by an input-output analysis for the impact on sectoral production which are viewed as being generated both by autonomous and by investment-induced exports to China. The substitution effect on domestic output due to outward investment is also subject to similar calculation. The second major part of the study focuses on tracing the distributional impact on wage incomes and nonwage incomes that are originated from changes in sectoral output. As it turns out, about 2.1 % of Taiwan’s GDP in 1993 could be attributed to Taiwan’s investment and export activities toward mainland China. The result of increasing profit versus decreasing wage income in the tradable sector is also in line with what the trade theory would predict.
Lei, K. C. (1997). China : Taiwan's trade and investment relations and their impact on Taiwan's income distribution (CAPS Working Paper Series No.48). Retrieved from Lingnan University website: http://commons.ln.edu.hk/capswp/40