The Sunday Review

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CATCHING UP: How Taiwan did it

These are some of the factors which helped Taiwan make the swift technological leap from labour-intensive to knowledge economy:

ITRI strategies: Taiwan's non-profit Industrial Technology Research Institute was set up to do the R&D that small private firms could not afford.

During the first energy crisis in the '70s, the country desperately needed new industries that could sustain economic growth and the ITRI chose electronics as its first target industry.

Many of Taiwan's world-class integrated circuit (IC) and IT companies were ITRI spinoffs.

Science Park at Hsin Chu: Taiwan's "Silicon Valley", set up in the '70s, nurtured start-up technology companies. Infrastructure and services were provided at reduced cost. Many of these start-ups have become household names -- such as Acer, the computer company.

Foreign-investment policies: Tax incentives encouraged technology-

oriented venture-capital firms to pump investment into Taiwan in the '80s.

Education: A better-educated workforce was needed for the new industries, and Taiwan successfully increased the percentage of workers with tertiary education from 14 per cent to 24 per cent between 1987 and 1997.

Reverse brain drain: The worrisome exodus of bright graduates to the West in the '60s and '70s proved a blessing in disguise when the same people started returning to Taiwan in the '80s. Armed with experience, technology and useful connections to world experts, they founded 40 per cent of the start-up companies in Hsin Chu Science Park.

Taiwan way to knowledge economy not for S'pore