Product Cycle and Industrial Hollowing-out: The Case of the Electrical and Electronics Sector of Taiwan

Author Name Tzu-Han YANG  (National Taipei University) /Yueh-Po LIAO  (Deloitte & Touche)
Creation Date/NO. September 2007 07-E-055
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This paper traces the route of Taiwan's industrial restructuring from 1980 to 1999, during which period Taiwan switched from a capital inflowing country to a capital-outflowing one. By establishing an empirical model based on the idea of Vernon's product cycle theory, we construct a quantitative measurement of product turnover and product upgrading. Tests are applied to the electrical and electronic industry to see whether its product turnover and product upgrading has significantly slowed down in the 1990s. If so, we may conclude that the industrial hollowing-out may have appeared. The empirical results show that product turnover and product upgrading do not significantly deteriorate in 1990s though the performances of the sub-industries within the EE industry are largely differentiated in 1990s compared with that in 1980s.