GES Taipei Workshop 2015 June 16, 2015 Le Méridien Taipei

Encouraging Inclusive Growth

Handbook

Organized by Industrial Technology Research Institute Kiel Institute for the World Economy

Sponsored by National Development Council

Table of Contents Program ......................................................................................................................... 1 Opening Address Speakers........................................................................................... 5 Keynote Speaker ........................................................................................................... 7 Invited Speakers ............................................................................................................ 8 Master of Ceremonies ................................................................................................. 20 Participant List ............................................................................................................. 21 Organizers.................................................................................................................... 30 Industrial Technology Research Institute............................................................30 Kiel Institute for the World Economy...................................................................32 Speech and Discussion Materials ............................................................................... 35 Keynote Speech................................................................................................36 Sustainable Growth by Qualified Services........................................................... 36 Key Points of Invited Speech .............................................................................40 Inclusive Growth in Taiwan and Beyond.............................................................. 40 Discussion Panels.............................................................................................46 Panel 1:................................................................................................................. 46 Promoting Innovation to Achieve Inclusive Growth ............................................. 46 Panel 2:................................................................................................................. 50 Encouraging Regional Inclusive Growth through Cooperative Innovation.......... 50 Notice ........................................................................................................................... 60

Program Time

Program

Monday, June 15, 2015 18:30-19:00

Networking

19:00-20:30

Welcome Banquet(by invitation) Venue: Pegasus Room(2F), Le Méridien Taipei Dress Code: Business Attire

Tuesday, June 16, 2015 Jadeite Room(3F), Le Méridien Taipei Master of Ceremonies: Debra Mao, Bureau Chief, Bloomberg News 08:30-09:30

Registration & Networking

09:30-09:50

Opening Address Tyzz-Jiun Duh, Minister, National Development Council Dennis J. Snower, President, Kiel Institute for the World Economy Director, Global Economic Symposium

09:50-10:20

Keynote Speech Arno Metzler Vice-President (Group III), European Economic and Social Committee, EU CEO, Association of Consulting Engineers

“Sustainable Growth by Qualified Services” 10:20-10:40 10:40-12:00

Coffee & Tea Break Invited Speeches Reiko Aoki, Executive Vice President, Kyushu University “Technological Standards and Innovation” Qi Liang, Dean, School of Economics, Nankai University “Financial Innovation in China's Commercial Banks” Albert Ting, Chairman, CX Technology Corp. “Inclusive Growth in Taiwan and Beyond” Moderator: Debra Mao, Bureau Chief, Bloomberg News

12:00-13:30

Lunch Venue: Amber Room(3F), Le Méridien Taipei

13:30-15:00

Panel 1: Promoting Innovation to Achieve Inclusive Growth Moderator: Chung-Ming Kuan, Academician, Academia Sinica Panelists: 1

Time

Program Tristan Ace, Global Partnerships and Development Manager, Social Enterprise, British Council

Douglass Carmichael, Strategy Consultant , Institute for New Economic Thinking

Do Hoon Kim, President of the Korea Institute for Industrial Economics and Trade 15:00-15:20 15:20-16:50

Coffee & Tea Break Panel 2: Encouraging Regional Inclusive Growth through Cooperative Innovation Moderator: Dennis Görlich, Managing Director, Global Economic Symposium Panelists： Pun-arj Chairatana, CEO, Noviscape Consulting Group Tain-Jy Chen, Professor, Department of Economics, National Taiwan University Tony Nash, Chief Economist, Complete Intelligence Qiyuan Xu, Director of Economic Development Division, Institute of World Economics and Politics, Chinese Academy of Social Sciences

16:50-17:00

Closing Remarks Dennis J. Snower President, Kiel Institute for the World Economy Director, Global Economic Symposium

18:30-20:30

Networking Dinner(by invitation) All foreign participants are invited. Venue: Capital Hall(34F), Taipei World Trade Center Club Dress Code: Business Casual

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Panel 1 Promoting Innovation to Achieve Inclusive Growth “Inclusive Growth” refers to sustained economic growth while at the same time improving equal access to opportunities among (groups of) individuals and reducing income disparities (ADB 2011). In this way, it enables individuals to enhance their living standards and promotes mobility across different social groups. A key driver of long-term economic growth is “innovation”. It creates new jobs and potentially raises productivity growth to support an upward development of wages over time. Innovation is multifaceted and can be carried out in various forms e.g. product and service innovation, business model innovation, organizational innovation and institutional innovation etc. Impacts of innovation on economic growth can be direct, indirect or be realized via spillover effects of innovation engagement and outputs. However, how innovation-driven prosperity can encourage inclusive growth is still unclear and needs to be clarified in more detail. Can innovation support inclusive growth? How could innovation be incentivized to increase prosperity and simultaneously better consider issues like income disparities and unequal access to opportunity? What kinds of innovation activities are expected to play a key role in this regard? Would it be government’s institutional and policy innovation or would it be innovation activities of firms such as organizational innovation? How could government’s institutional innovation strengthen innovation engagement of firms to power economic growth with social inclusion? Key words: innovation, inclusive growth, spillover effect, income inequality

3

Panel 2 Encouraging Regional Inclusive Growth through Cooperative Innovation Encouraging inclusive growth aims at realizing strong economic growth and at making use of it to enhance living standards and social welfare among different social groups within and across countries. Governments in many countries have intensified their support for inclusive growth which is reflected in their various new economic and developing strategies such as “Europe 2020” of the European Commission (EU), the “Economic Strategies” of Singapore and the “New Economic Model” of Malaysia. Focusing on the industrial developing trends of countries in a region, different kinds of innovation activities can be identified to gradually become the main driver of their economic growth. Being faced with the high uncertainties and risks of innovation, how could countries work on joint cooperation to enhance their innovation intensity and through innovation to encourage a more equal regional development? How could countries’heterogeneity in economic development, business models and societal customs and culture be better considered to create new chances for cooperation among themselves to encourage regional growth? How to initiate and strengthen spillover effects of innovation on growth within and across countries? How to develop effective regional institutional and organizational innovation to support a more equal regional economic and societal development? Key words: regional inclusive growth, institutional innovation, organizational innovation

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Opening Address Speakers

Tyzz-Jiun Duh Dr. Tyzz-Jiun Duh, as Minister without portfolio of the Executive Yuan, was appointed Minister of National Development Council in February 2015. Previously, Dr. Duh was appointed Minister without portfolio of the Executive Yuan during December 2014 - February 2015, for assisting the Premier in reviewing cross-Ministerial policies, programs and legislations in the areas of finance, economy, and science & technology. Dr. Duh served as Minister of Economic Affairs (August - December 2014), Deputy Minister of Economic Affairs (February –August, 2014), as well as Vice Minister of Economic Affairs (June 2012 - February 2014), respectively. At those posts, his primary responsibilities were taking charge of policies related to industrial development, industrial technology, trade, investment, energy and mines, water resources, SMEs, IPRs, standards, as well as geological survey, etc. Prior to the position of Vice Minister of MOEA, Dr. Duh served as Director General of the IDB from 2009 to 2012. In this capacity, he was responsible for industrial development policy, the drafting of related strategies and measures, the promotion of programs offering guidance on industrial upgrading, the management and development of industrial zones, the drafting of industrial development related tax and banking measures, the control of industrial pollution, and guidance on industrial safety and plant management. Dr. Duh first joined the MOEA in 1983 as a Specialist and Patent Examiner at the National Bureau of Standards. Beginning in 1994, he served as a Section Chief at the Executive Yuan for two years before holding the positions of Department Director and Secretary General at the IDB between 1997 and 2003. Afterward, Dr. Duh served as Deputy Director General of the Small and Medium Enterprise Administration (2003-2004), Director of the Department of Commerce (2004-2006), and Director General of the Department of Industrial Technology (2006-2009) . Dr. Duh was born in 1959 and majored in pulp and paper manufacturing at National Taiwan University (NTU). He received his doctoral degree from NTU in 1992 and completed his postdoctoral research at State University of New York in 1993. Since 2003, Dr. Duh has also been a part-time associate professor at the Graduate Institute of Business Administration at Soochow University. Dr. Duh is married, and his wife is a professor and chair in the Graduate Institute of Earth Science at Chinese Culture University. 5

Dennis J. Snower

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1968-1971

New College, Oxford University, BA 1971

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1971-1975

Princeton University, MA 1973, PhD 1975

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1974-1975

Teaching Assistant, Princeton University



1975-1979

Assistant Professor, University of Maryland

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1979-1981

Assistant Professor, Institute for Advanced Studies (IHS), Vienna

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1980-1983

Lecturer, Birkbeck College, University of London

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1983-1988

Reader, Birkbeck College, University of London

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1989-2004

Professor of Economics, Birkbeck College, University of London

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1992-1994

Chairman, Department of Economics, Birkbeck College

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1991-1998

Program Director, Human Resources, CEPR, London

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1998-1999

Program Director, Public Policy, CEPR, London

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1999-2004

Program Director, Welfare State and Labor Markets, IZA, Bonn



2004 Program Director, Labor Markets and Institutions, IZA, Bonn



since Oct. 2004 Professor of Economics Christian-Albrechts-University, Kiel

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since Oct. 2004 President, Kiel Institute for the World Economy

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Keynote Speaker

Arno Metzler Personal data Date/place of birth 01.04.1955 in Hesse Nationality: German Professional development 1973 final secondary school examinations law studies 1979 first state examination, Bonn 1982 second state examination, Düsseldorf since 1982 lawyer with own office Occupation 1984 –1992 general manager of the German Association of Showmen 1992 –2012 general manager of the German Federal Association of Liberal Professions (Berlin, Brussels), chief editor of the magazine „der freie beruf“ since 2002 member of the European Economic and Social Committee (EESC) Currently vice-president of the Various Interests Group, member of the EU-Turkey Joint Consultative Committee Since 2012 general manager of the German Association of Consulting Engineers

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Invited Speakers

Reiko Aoki Executive Vice-President, Kyushu University Faculty Fellow, Research Institute of Economics, Trade and Industry Visiting Professor, Institute of Economic Research, Hitotsubashi University Principal Investigator, Japan Science and Technology Agency, “Institutions and Policies to Complement Science, Technology and Innovation Policy: Recommendations for Implementation and Action”, Principal Investigator, August 2013-July 2016. http://www.ristex.jp/stipolicy/en/project/project12.html Education

1987

Stanford University, PhD, Economics

1986

Stanford University, MS, Statistics

1983

University of Tsukuba, MA, Economics

1981

University of Tokyo, BS, Mathematics

Academic Appointments: 

Professor, Institute of Economic Research, Hitotsubashi University, July 2006 – November 2014

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Associate Professor, Department of Economics, University of Auckland, December 2005 –July 2006,

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Associate Professor, Institute of Economic Research, Hitotsubashi University, January 2003 –December 2004

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Senior Lecturer, Department of Economics, University of Auckland, September 1997 – November 2005,

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Assistant Professor, Department of Economics, State University of New York - Stony Brook, January 1990 - July 1997,

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Assistant Professor, Department of Economics, The Ohio State University, September 1987 –January 1990

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Faculty Fellow, Research Institute for Economics, Trade and Industry, August 2011 – present

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Director, Center for Intergenerational Research, Hitotsubashi University, April 2013 – present, April 2009- March 2011

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Qi Liang Professor Qi Liang is currently a senior Professor of Financial Economics and Dean of the School of Economics at Nankai University, China. In addition, he is also Deputy Director of Collaborative Innovation Center for China Economy, which is a national-wide research center supervised by the Ministry of Education of China. Professor Liang received his PhD from Nankai University in financial economics, and he is also a Chartered Financial Analyst (CFA). Professor Liang is rewarded as New Century Excellent Talents, which is the first top talent project by the Ministry of Education of China. Professor Liang is a member of the Financial Economics Committee in Higher Learning Institutions of the Ministry of Education. He is Executive Director of China International Finance Academy, as well as a Director of Chinese City Finance Academic. Professor Liang is awarded as one of the top supervisors in TEHUA Postdoctoral Program at the Ministry of Education of China. Professor Liang’s research interests are in the fields of financial economics, in particularly focusing on risk management and macro-financial economics. He has been responsible for a number of important research projects by Chinese top academic organization: National Social Science Fund, National Natural Science Foundation, and Social Science Foundation of the Ministry of Education of China. Professor Liang has published a range of papers, approximately more than 40 papers, in international and Chinese excellent academic journals such as Journal of Banking & Finance, China Economic Review、Applied Economic,

Economic Research，Management World, World Economy, Financial Research, China Industrial Economics etc. Based on his outstanding research contribution, he was awarded as the first prize in Chinese Finance Annual Meeting, the first prize of Tianjin Humanities and Social Science Research Achievement. In particularly, Professor Liang was awarded the

Elsevier Economics Journal Most Cited Articles by Chinese Mainland Authors from 2004 to 2008.

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Albert K. Ting Mr. Albert Ting is the Chairman of CX Technology Corporation of Taiwan, Chairman of Phu Hung Life Insurance of Vietnam and Chairman of Phu Hung Securities of Vietnam. Born in Taiwan, Mr. Ting has been a long term investor of Vietnam over the last 26 years. Mr. Ting is a graduate of Harvard College and MIT Sloan School of Management. Mr. Ting is also a graduate of Taiwan’s National Academy of Civil Service Senior Civil Service Training Program and a graduate of the Federal Executive Institute of Charlottesville, Virginia. Mr. Ting is a 2011 Eisenhower Fellow and a 2012 & 2014 Boao Forum Asia Young Leader. Mr. Ting is also an Honorable Fellow of Chinese Military Academy. Mr. Ting is a Director of Lawrence S. Ting Memorial Foundation, a member of Global Economic Symposium’s Advisory Board, and a Supervisor of World Vision Taiwan. Mr. Ting is a Trustee of the Fay School of Southborough, Massachusetts, and a member of MIT Sloan School Asia Executive Board. Mr. Ting is also a member of Eisenhower Fellowship President’s Advisory Council. Mr. Ting is a lecturer for the Civil Service Training Institute of the Government Personnel Directorate General and an Associate Professor of National Normal University’s EMBA program. Mr. Ting served as an Associate of Morgan Stanley New York and a Vice President of Morgan Stanley United Kingdom. Mr. Ting served as a Director of First Commercial Bank and First Financial Holding and was appointed by Taiwan’s Ministry of Finance as its representative on the board of Mega Financial Holdings. Mr. Ting is a recipient of National Academy of Civil Service Certificate of Merit and a recipient of Ministry of Defense Honorable Memorial Insignia.

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Moderators

Chung-Ming Kuan Chung-Ming Kuan has been an academician in Academia Sinica since 2002, and is NTU Chair Professor in the National Taiwan University (NTU). In 2014, he was elected as Fellow of The World Academy of Sciences (TWAS). He is an economist with profound knowledge in econometrics and a practitioner in national economic policy making. Kuan served as Minister of the National Development Council in Jan. 2014 - Feb. 2015, and was Minister without Portfolio in the Executive Yuan (Feb. 2012 - Feb. 2015) and Minister of the Council for Economic Planning and Development (Feb. 2013 - Jan. 2014). Prior to his term of public service, he has been NTU Chair Professor in the Department of Finance since 2009, Director of the Institute of Economics, Academia Sinica in 2001-2007, and a professor in the Department of Economics, NTU in 1994 - 1999. He published numerous papers in top econometrics and statistics journals, and was associate editor for several leading journals, including Econometric Reviews, International J. of Forecasting, and J. of Econometrics. He initiated Symposium on Econometric Theory and Applications (SETA) in 2005, and founded Taiwan Econometric Society in 2007. Kuan received his Ph.D. in Economics from University of California, San Diego. He joined the faculty as assistant professor (1989-1995) and associate professor with tenure of the Department of Economics, University of Illinois at Urbana-Champaign (1995- 1996).

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Dennis Görlich

Dennis Görlich is Managing Director of the Global Economic Symposium (GES) and an economist at the Kiel Institute for the World Economy, Germany. His research interests are globalization and labor markets, in particular income inequality and the changing organization of work. Dennis holds a PhD in Economics from the University of Kiel, Germany, and a Master degree from the University of Maastricht, Netherlands. He is also a graduate of the Kiel Institute’s Advanced Studies Program.

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Panelists

Tristan Ace Tristan Ace leads the British Council's Social Enterprise Programme across Asia, where he is based in Hong Kong, and prior to that he spent one year in Beijing and 4 years in Myanmar. The British Council's Social Enterprise Programme operates in 12 countries in Asia and delivers a range of support from capacity building to government advisory. Tristan has led on developing this strategy and worked with a range of senior stakeholder across the region, including the Myanmar government to deliver the first social enterprise policy dialogue with the Ministry of National Planning in 2014, the Thai governments strategy on social investment and in Bangladesh he has recently been developing in initiative on social investment with senior stakeholders from the Bangladesh Central Bank. In addition he has developed the British Council's capacity building programme across Asia and been leading on the recently launched Business and Investment Readiness Programme. Before moving to Asia, Tristan spent five years in Central and Eastern Europe. Overall Tristan has worked in over 20 countries in Europe, Asia and Africa and most recently has launched the British Council's Social Enterprise Programme in Ghana, Kenya and Ethiopia.

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Douglass Carmichael Douglass Carmichael is a Strategy Consultant for the Institute for New Economic Thinking. Previously, Carmichael was the President of Metasystems Design Group and BigMind Media. He has served as a visiting scholar at Stanford University’s mediaX project and helped develop the Stanford Strategy Studio, where he worked on issues related to climate change and social thought. He also ran a network for former Vice President Al Gore’s Reinventing Government initiative. Carmichael has served as an assistant professor at the University of California at Santa Cruz. He also was a research fellow at the Harvard University Center for Cognitive Studies and a post-doctoral fellow at Harvard’s Center for Technology and Society. Carmichael received a bachelor’s degree in physics and a doctoral in psychology from the University of California at Berkeley

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DoHoon Kim

Education Ph.D., Economics, June 1990, University of Paris I (Pantheon-Sorbonne), France D.E.A., International Economics, October 1987, University of Paris I B.A., International Economics, February 1979, Seoul National University, Seoul, Korea Fields :

Academic Major: International Economics

Professional Interests: Trade Policies, Industrial Policies, Regulatory Reform Work Experience 2013. May - Current

Present 19th President of KIET

2005. Nov. - 2006. July Vice President for Research, KIET 2004. Jun - 2005. Oct.

Director of Industrial Cooperation and Globalization Division, KIET

2003. Aug. - 2004. Jun Director of Economic Survey and Forecasting Division, KIET 2000. Aug. - 2003. July Director of Industrial Policy Division 1999. Sep. - 2013. April Senior Research Fellow, KIET 1997. Sep. - 1999. Sep. Principal Administrator, OECD Trade Directorate. 1997. Feb. - 1997. April Counselor to the Minister, Ministry of Trade, Industry and Energy 1979. Feb. -

Started to work at KIEI(now KIET)

Advisory Activities 2014. Jan. –Current

Member of Advisory Council for Budget Policy

2013. May –Current

Member of National Commission for Corporate Partnership

2013. Feb. –Current

President of EUSA KOREA

2012. Apr. –Current

President of Korea Society for Regulatory Studies

2004. Jan. - 2011.

Member of FTA Civic Planning Committee

2004. Jan. - 2011. Aug. Member of FTA Civic Advisory Committee Ministry of Foreign Affairs 2008. Feb. - 2011.Aug. Fair Trade Committee, Member of Market Structure Analysis Committee (Chairman)

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Pun-Arj Chairatana Dr. Pun-Arj Chairatana (PAC) has been recognized as one of pioneer of foresight and innovation management in Thailand. He is the Founder and Managing Director of NOVISCAPE Consulting Group (NCG), Director of Public Policy Entrepreneurship and Foreign Affairs under Public Policy Development Office (PPDO) –the Cabinet Think Tank, and senior consultant at SASIN Management Consulting Unit, Chulalongkorn University. He is one of co-Founders of Graduate School of Management and Innovation (GMI), King Mongkut’s University of Technology Thonburi (KMUTT), and policy analyst at National Science and Technology Development Agency (NSTDA). He extensively teaches and speaks on foresight and innovation for renowned universities and venues, e.g. at Chulalongkorn University’s Technopreneurship and Innovation Management program (CUTIP), and the Technology Management Program at the College of Innovation, Thammasat University. He is a member of the International Editorial Board of the Asian Journal of Technology Innovation (AJTI) and Associate Editorial Board for the African Journal of Science, Technology, Innovation and Development (AJSTID). He is now engaged with “city innovation system” research in Southeast Asia Megacities. His expertise is in the areas of trend analysis, strategic foresight, technology and innovation management, public policy, political economy, creative economy, service and social innovations. PAC obtained his PhD in Economics of Technological and Industrial Changes (ETIC) from Aalborg University, Denmark, and MSc in Technology and Innovation Management (TIM) from Science Policy Research Unit (SRPU), University of Sussex at Brighton, UK. He received a BSc in Physics from Fast Neutron Research Facility (FNRF), Chiang Mai University, Thailand.

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Tain-Jy Chen Tain-Jy Chen is a professor of Department of Economics at National Taiwan University. His research interests are international trade, economic development, trade theory, and foreign direct investment. He was the Minister of Council for Economic Planning and Development from 2008 to 2009, and the President of Chung-Hua Institution for Economic Research (CIER) from 2002 to 2005. He also serves as a consultant to CIER. Education 

Ph. D. (Economics) Pennsylvania State University

Positions held 

Professor of Economics, National Taiwan University, Taiwan



Former Minister, Council for Economic Planning and Development, Taiwan



Former President, Chung-Hua Institution for Economic Research, Taiwan

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Tony Nash Tony Nash is the Chief Economist at Complete Intelligence. As a global market leader and thought leader on economics, risk and industries, Tony is a frequent public speaker and a facilitator of strategic discussions with business and government leaders. He is a regular contributor to leading global media which include regular sessions on CNBC, Bloomberg, BBC World and Al Jazeera. He is also a key contributor to regional economic and industry forums and closed-door corporate executive dialogues. Tony has a longstanding track record of creating, inspiring, motivating and leading culturally diverse teams in developed and developing markets across EMEA, North America and Asia. He has worked with multinational clients on management consultancy engagements including national economic transformation plans, market entry strategies, due diligence and cross border transactions. Previously, Tony built and led the global research and consulting business for The Economist (EIU) where he managed revenue targets, built the global brand, restructured the operation and initiated their first Asia acquisition (ClearState). He has also been a social entrepreneur, media entrepreneur, writer and consultant. Tony has a Master degree in International Relations from the Fletcher School of Law & Diplomacy at Tufts University and a BA in Business Management from Texas A&M University.

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Qiyuan Xu

Qiyuan Xu holds a doctor’s degree from Northeast Normal University (China) in 2008. Xu joined IWEP (Institute of World Economics and Politics), CASS (Chinese Academy of Social Sciences) since 2008, and becomes a senior research fellow since 2011. In 2012, he also took up the role of advisor to the international collaboration department in Ministry of Finance of PRC. Xu also sits in the work team of CEEM (China’s External Economic Environment) in IWEP. This work team issues a quarterly report on global macroeconomics, and he is responsible for the research on China and RMB issues. He has published 35 articles issued in China & World Economy and Chinese top journals, 100 columns published in Financial Times, Financial World in English and leading media in Chinese. And three books have been published on RMB’s topic, (1) The Study of Exchange Rates Variation during RMB’s Internationalization (With Liu Lizhen), China Financial Publishing House, 2009. (2) The Economic Analysis of China Yuan’s Exchange Rate Regime (With He Fan), Shanghai University of Finance and Economics Press, 2008. (3) A Study of China Yuan’s Internationalization (with Liu Lizhen), People's Publishing House, 2006.

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Master of Ceremonies

Debra Mao Debra Mao is Taipei Bureau Chief for Bloomberg News where she oversees coverage of the economy, politics, markets and corporations. Mao previously covered securities regulation and judicial reform as a Hong Kong-based legal correspondent. Her career began in Washington, DC, where she was part of the ABC News' "Nightline" production team before she joined Bloomberg TV in Asia. Her television experience also included on-air reporting of stock trading on Asia's biggest exchanges. Mao is a native of the San Francisco Bay Area and graduated from Harvard University with a BA with Honors in sociology.

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Participant List Business Leaders

Baggio Chang Co-founder, iLOHAS Taiwan Corporation

David Y. Chang Former CEO, Greater China, Royal Philips Electronics

Niven Huang General Manager, KPMG Sustainability Consulting Co., Ltd

Jason Hsu Curator, TEDxTaipei.

Ruping Kao General Manager, Taiwan NGO Social Enterprise Co.,Ltd.

Victor Kuan Chairman & Citi Country Officer, Citibank Taiwan Ltd.

Enid Tian Analyst, AppWorks Ventures 21

Policy Makers Connie Chang Director General, Department of Overall Planning, National Development Council Wen-Zhi Chao Inspector, Economic Development, National Development Council Mei-Chu Chen Deputy Director, Department of Overall Planning, National Development Council Shu-Chen, Chen Senior Specialist,Department of Industrial Development, National Development Council Yen-Ting Chen Section Chief, Department of Industrial Development, National Development Council Cheng-Yi Cheng Section Chief, Regulatory Reform Center, National Development Council Li-hui, Chu Deputy Director, Department of Overall Planning, National Development Council Chih-Win Chuang Executive Officer, Department of Social Development, National Development Council

Chia-Yi Hseh Senior Specialist, Department of Human Resources Development, National Development Council Yan-Ching, Hwang Senior Specialist, Department of Overall Planning, National Development Council Anna Hsu Senior specialist, Taipei City Office of Commerce 22

Betty Hu Director, Industrial Development Bureau, Ministry of Economic Affairs Tzu-Hwa Huang Section Chief, Department of Social Development, National Development Council Fang-Guan Jan Director General, Department of Industrial Development, National Development Council Li-Chien Kuo Director-General, Ministry of Finance Department of Planning Tzung-Chi Lee Policy Analyst, Department of Economic Development, Taipei City Government Der-Sheng Lin Deputy Director General, Department of Industrial Development, National Development Council Gyh-Mei, Lin Deputy Director, Department of Human Resources Development, National Development Council Lih-Jen Lin Deputy Director, Economic Development, National Development Council C. J. Lo Executive Director, Regulatory Reform Center, National Development Council Carl K. Y. Shaw Director-General, Department of Humanities and Social Sciences Ministry of Science and Technology Jui-Chuan, Tsai Senior Specialist, Department of Overall Planning, National Development Council

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Huei-Jane Tschai Director, Board of Science and Technology, Executive Yuan (BOST) Cheryl H.J. Tseng Chief Secretary, National Development Council Ming-Huei, Wu Director, Economic Development, National Development Council Ming-Ji Wu Director General, Industrial Development Bureau, Ministry of Economic Affairs Chih-Ching Yang Director-General, Department of Planning, Ministry of Health and Welfare Dang-Hsin Yang Inspector, Economic Development, National Development Council Chih-Cheng Yeh Director General, Department of Planning, Ministry of Science and Technology (MOST) Shih-Wei Yen Deputy Executive Secretary, National Development Fund Executive Yuan Ya-Chi Zheng Assistant Director, Economic Development, National Development Council

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Research Organizations

Chau-Chyun Chang Deputy General Director, Industrial Economics and Knowledge Center (IEK), Industrial Technology Research Institute (ITRI)

Shin-Horng Chen Research Fellow, Director of the Second Research Division, Chung-Hua Institution for Economic Research Wan-Hsin Liu Senior Researcher, Kiel Institute for the World Economy, Germany (IfW, Germany) Network Coordinator, IfW, Germany Equal Opportunity Officer, IfW, Germany

Ching-Peg Peng President, Taiwan Competitiveness Forum Tze-Chen Tu General Director, Center of Knowledge-Based Economy and Competitiveness(KEC), Industrial Technology Research Institute (ITRI)

Jiann-Chyuan Wang Vice President, Director of the Third Research Division, Chung-Hua Institution for Economic Research

Thomas Wei Chair Professor, Taiwan Shoufu University 25

Lih-Chyi Wen Research Fellow/ Director, The Center for Green Economy, Chung-Hua Institution for Economic Research

John West Executive Director, Asian Century Institute

Bi-Chu Wu Director, Center of Knowledge-Based Economy and Competitiveness, Industrial Technology Research Institute (ITRI)

Feng-Shuo Yang Director, Taiwan Institute of Economic Research

Robert Jih-Chang Yang Senior Advisor, Industrial Technology Research Institute (ITRI)

Jyh-Shing Yang Senior Director, Center of Knowledge-Based Economy and Competitiveness, Industrial Technology Research Institute (ITRI)

Pei-Ju Yu Analyst, Chung-Hua Institution for Economic Research 26

Lei Yuan Director of the Industrial Operation Research Office of Industrial Economics Institute, Chinese Academy of Social Sciences (CASS), China

Academics

Been-Lon Chen Research Fellow, Academia Sinica

Churchill Chen CEO, NCTU Alumni Association

Yih-Chyi Chuang Dean of College, College of Social Sciences

Kam-Hon Kan, Director, Institute of Economics, Academia Sinica

Michael Kuo CEO, Hukui Biotechnology Corporation

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Hsien-Feng Lee Director, Public Economics Research Center, College of Social Sciences, National Taiwan University

Huei-Chu Liao Professor of Department of Economics, Tamkang University

Pei-Ing Wu Professor, Department of Agricultural Economics, National Taiwan University

Gee San Vice Chairman, Taiwan External Trade Development Council (TAITRA)

Anderssen Tu Vice President, Rich IP Technology

Media Cristina Pi-fen Chen Deputy director, senior reporter Banking & Finance News Department COMMERCIAL TIMES

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Jay Cheng Reporter, Economic Daily News

Wan-Chien Hung News Dept. Journalist, UBN Judy Lin Lead Reporter, DIGITIMES

Debra Mao Bureau Chief, Bloomberg News Taiwan Tse-Jung Tung Reporter, United Evening News

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Organizers Industrial Technology Research Institute Industrial Technology Research Institute (ITRI) is a nonprofit R&D organization engaging in applied research and technical services. Founded in 1973, ITRI has played a vital role in transforming Taiwan’s economy from a labor-intensive industry to a high-tech industry. Numerous well-known, high-tech companies in Taiwan, such as leaders in the semiconductor industry TSMC and UMC, can trace their origins to ITRI.

Innovative Research ITRI focuses on six research fields include Information and Communications, Electronics and Optoelectronics, Material, Chemical and Nanotechnology, Medical Device and Biomedical, Mechanical and Systems, Green Energy and Environment. ITRI has aggressively researched and developed countless next-generation technologies, including WIMAX wireless broadband, solar cells, RFID, light electric vehicles, flexible displays, 3-D ICs and telecare technologies. In addition, ITRI’s Flexible Electronics Pilot Lab and Nanotechnology Lab provide international-level research platforms where R&D can be conducted jointly with partners. ITRI has also seen significant growth in intellectual property business and new ventures in recent years and is devoted to creating a model that would make Taiwan manufacturing even more competitive in the international arena.

Fostering Entrepreneurship and CEO Leadership ITRI employs around 6,000 personnel, including over 1,300 who hold Ph.D.s and 3,000 with master’s degrees. By disseminating both technology and talent, ITRI has led the technology industry into the 21st century and has cultivated over 140 CEOs in the local high-tech industry. In addition to its headquarters in Taiwan, ITRI has branch offices in the California Silicon Valley, Tokyo, Berlin, Moscow and Eindhoven. ITRI, headquartered in Taiwan, has offices in the United States, Japan, Germany, Russia and Netherlands in an effort to extend its R&D scope and promote opportunities for international cooperation. In the United States, it has long-term collaborative arrangements with MIT, Carnegie Mellon University, the University of California at Berkeley and Stanford University. To date, ITRI holds more than 20,000 patents and has assisted in the creation of more than 240 start-ups and spin-offs. In 2013, ITRI recieved three R&D 100 Awards: iAT Technology, 30

FluxMerge and ButyFix. In 2012, ITRI recieved six R&D 100 Awards: Lignoxy, TEMM, SideLighter, aePLASMA, Light&Light and AVA- Clamp. In 2011, ITRI received six prestigious international awards: The Excellent Organization, Solar Industry Awards in the U.K. for Solar Radome, two R&D 100 Awards, two Wall Street Journal Technology Innovation Awards, and the Silver Award for The Society in Information Display’s (SID) Display of the Year Awards. In 2010, the institute received five prestigious international awards: The Overall Gold Wall Street Journal Technology Innovation Award for its FlexUPD technology, runner- up in the Semiconductor category for its MDPS (Micro-Deformable Piezoresistive Sensor Technology) and three R&D 100 Awards for FlexUPD, i2/3DW and Reddex. In 2009, the institute also received four prestigious international awards: The Wall Street Journal’s 2009 Technology Innovation Award for its FleXpeaker technology, an R&D 100 Award for the High Safety STOBA Lithium Battery Material Technology, the iF Design Award from the International Forum Design in Germany for ITRA’s Fluid Driven Lighting System, and the Red Dot Design Award by the Design Zentrum Nordrhein Westfalen in Essen, Germany, for its Flexio Radio Technology.

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Kiel Institute for the World Economy The Kiel Institute for the World Economy is one of the major centers for ● ● ●

research in global economic affairs, economic policy advice, and economic education.

The Institute regards research into potentially innovative solutions to urgent problems of the world economy as its main task. On the basis of this research work, it advises decision makers in politics, the economy and society, and keeps the interested public informed about important matters of economic policy. As a portal to world economic research, it manages a broadly cast network of national and international experts, whose research work flows directly or indirectly into the Kiel Institute’s research and advisory activities. The Kiel Institute attaches particular value to economic education and further training and closely cooperates with the world’s largest library in the economic and social sciences. The research of the Kiel Institute focuses on creating solutions to urgent problems in global economic affairs that meld economic efficiency and social justice and offer adequate incentives for economic activity based on individual initiative. In order to quickly react to new challenges in economic research, the Kiel Institute’s research activities are organized in relatively small Research and Project Areas (organization structure). The currently seven Research Areas are working on well- defined research projects within our Programs "The International Economy and International Economic Policy", "Economic Policies for Sustainable Development", and "Macroeconomic Activity and Policy". This decentralized structure allows for a flexible allocation of researchers to Research and Project Areas and facilitates the establishment of new fields of research. The research activities are supported by the services of the Kiel Institute’s Centers. The Centers provide consulting services to socio-economic policy decision makers, generate the Kiel Institute economic forecast report, coordinate the post-graduate Advanced Studies in International Economic Policy Research Program, maintain the Kiel Institute’s research networks, inform the media and general public about current activities of the Institute, and provide infrastructure development services.

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Global Economic Symposium The Global Economic Symposium (GES) is a high-level solution forum organized annually by the Kiel Institute for the World Economy, in cooperation with well-known international partner institutions. Established in 2008, the GES challenges leading international decision-makers from academia, business, politics, international organizations and civil society to develop new solutions to major global problems. Due to their global dimension, the challenges addressed at the GES cannot be solved by national policy instruments alone, but require global cooperation and dialogue. Examples of these challenges are financial crises, climate change, energy security, poverty and inequality, unemployment, migration, education deficits, or deficient global governance. The GES seeks to initiate such cooperation and dialogue by providing an ongoing strategic process, in which the global community generates ideas, develops visions and pursues concrete projects. The process is supported by a research base provided by researchers from the Kiel Institute for the World Economy and the partner research institutes. The outcomes of each GES are summarized in various publications. The most promising solutions proposed at the GES 2014 are presented in the “GES Selected Solutions 2014/15”. The GES 2015 will take place in Kiel, Germany, on October 12-14, 2015. The overarching theme will be “Values to Guide Economies,” as we see an urgent need to explore common values in order to support and guide sustainable and equitable growth. There is growing evidence that global problem-solving processes have often come to a stand-still due to unbridgeable differences in the underlying values of the various players. GES sessions of the year are divided into four thematic clusters: • Financial Regulation and Stability • Environmental Sustainability • Societal Development, Integration and Equality • Innovation and Prosperity.

The different sessions in these four themes are expected to achieve the following goals: 33

1. Identifying the key values from the specific aspect considered 2. Developing innovative solutions—based on the identified key values—which have potential to be implemented in practice to deal with specific challenges.

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Speech and Discussion Materials

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Keynote Speech Sustainable Growth by Qualified Services

Arno Metzler Vice-President (Group III), European Economic and Social Committee (EESC), EU, CEO, Association of Consulting Engineers Twenty years ago, many analysts and politicians shared a dogma: The third sector, services, would be the driving force for growth in future. Economies should increase the share of services, they proposed. At the same time they were right and wrong. Yes, services play a crucial role for the economy. But, no, a simple shift from the second sector, industry, to services has not showed to be a magic formula. Industry is still a driving force of growth and will always be. The picture is much more complex. What we can see now is that the relation between production and service has developed to a large degree. Products often are embedded into services like leasing, maintenance, troubleshooting, advisory, even replacement by new products like with mobile phones where you can get a new phone every two years. Also, new distribution systems, ways and partners are created. This melting of product and service will, I’m totally sure about this, proceed by the effects of digitalization, of further integration of information, relations and services. Customers will no longer buy a product without service propositions. They don’t want to possess a car or fridge. They want to drive and have fresh food, ordered by an app or even automatically and delivered in almost no time when needed. The functioning will be in the center, not the thing. People will buy mobility, not a car. Product and service will become linked in a new way. Besides, the sector of unique products with emotional vales is expanding, e.g. watches. This has a great impact on consumer expectations. Consumers don’t choose by comparing patterns of a good but choose a package of functional service they rely on and they cannot control. Trust becomes much more important. Image, lifestyle, sustainability are other factors. Likewise, this will also change B2B-relations. 36

Business customers will also chose the service provider who is expected to adapt best to their special needs. Again, trust is in the center of the decision. I would like to draw up today a model of sustainable growth by qualified services. I don’t claim this to be a magic formula but I’m convinced that it sets up mechanisms that meet the described market expectations and thereby will generate sustainable growth. First, a trustworthy brand is crucial to generate trust. Due to the increasing complexity of markets and services, there is nearly always an asymmetry of information between service provider and customer. Information costs for the selection of a suitable service provider often become so high, that trust increasingly becomes a crucial factor in the selection process. Here, we can build on experience with the asymmetry of information. When my teeth ache, I go to my dentist. I haven’t seen his diploma, nor do I know the topic of his last training. Nevertheless, I am assured that he is able to cure my pain because I know he has a diploma and I know that he regularly participates in advanced training. There is a system I can rely on. Even if the system is not known in detail, patients rely on it. And they can rely on it. It is the system of the liberal professions built up over decades and based on rules, qualification, reliability, trust. People know the brand of the liberal profession and trust it. It is the same with consulting engineers. When hiring a consulting engineer you trust him to be independent and to find the best solution for the customer. Most people don’t know in detail but trust that this is the case. In Europe, we can assure that they are right, that they can rely on the brand European consulting engineer. Only independent experts with high, up-to-date qualifications are deployed for the projects. This is assured by chambers for single persons or the engineering firms who have a vital interest in maintaining this trust as the basis of their reputation, their brand. In Germany, for instance, the title “Consulting Engineer” is protected by law. Only when meeting criteria like high professional qualification, experience and independence from any own interest of production or delivery, the title can be carried. Me personally, I am a lawyer. I don’t know what experiences you have already made with my profession. But in the European system of liberal professions there are strong mechanisms to kick bad lawyers out of the market. Consequently, when 37

accused of murder or hopefully a less severe crime, you don’t have to google test results but can rely on your lawyer if he also has the qualification for criminal law approved by his chamber or bar association –again a brand based on trust. These examples show that asymmetry of information between service providers and customers can be dealt with on a basis of a trustworthy brand that assures at least a minimum of quality. Second, the brand has to be built on sustainable quality. To generate trust in a sustainable way, the quality of the brand has to be built on the quality of the services. This is not a public relations but a management task. Again an example from the world of consulting engineering: engineers do not seek the cheapest and fastest solution: How can we set up the building quickly, assure that it won’t collapse in the first five years and save money? This approach may generate a short-term benefit but it won’t generate trust, it won’t generate sustainable growth. Consequently, consulting engineers, following their professional ethos, seek the best long term solution for their clients. They take into account technical, economic, social and environmental factors to find the best solution in the long run. They analyze life-cycle-costing. They extrapolate energy costs and develop digital models to ensure the adaptability to future requirements, like later reconstructions, for instance. Of course, this integration of sustainability into the heart of the services is no simple task. It requires a permanent adaptation to technical, economic and societal developments. Partly, this can be organized by systematic outlooks, by research and development strategies. But in the end, it is the people that matters. Sustainable service brands can be built only on open-minded, innovative persons. Permanent training, an innovation friendly culture and also incentives for personal development I have already hinted at the fact that digitalization will lead to a further integration of services into value chains. Developments like smart production, the internet of things, big data management etc. have to be reflected by the service providers. Traditional sectors of the economies will become more and more blurred. Also for the liberal professions that I use as a base for my model of sustainable growth by qualified services, there is a large potential for further development. Service providers should also ask how they can interlink their services –be it with other services or with production: 38

- Engineers, architects and doctors could be working jointly on the health services and hospitals of tomorrow. - Tax advisors and consulting engineers could be working jointly on the economic efficiency of production processes. Third, sustainable quality has to be assured by binding market rules. I have described very demanding requirements for sustainable service brands. Companies who want to take that path will need some room for maneuver –a harsh competition in price a pure capitalism won’t lead to sustainable service brands. What we need is a stable platform for competition in performance. Trustworthy service brands will develop only if they can trust in transparent rules. At the beginning of my speech I have referred to quality rules for dentists. They need to register and their service is linked to a compulsory membership in a chamber that oversees the professional activity. This kind of quality assurance can be called regulatory-based approach and has shown to be an effective, transparent mechanism. Apart from that, the quality can also be assured by a market-based approach. According to a common understanding of quality, to a shared professional ethos, it is the companies that assure the quality of their services, triggered by their interest to sustain their good reputation. Their market model is based on the trust in their brand. This second, market-based approach also needs rules, at least informal rules in the market to deploy qualified staff in the projects and to give their employees the freedom to deliver the best solution for the customer. This market-driven quality management can be founded on internal or public codes of conduct or even certifications. This is no surprise: in the end, codes of conducts or certificates are again bases of quality brands, of trust. Fourth, the brand has to fit into societal needs. Trust is not the only selection criterion of customers. Increasingly, the image of a company concerning responsible social behavior, corporate citizenship, has become a vital part of the brand. Thus, sustainability is a three-dimensional asset. It refers to the long-term quality of the service as well as to environmental and social responsibility. Sustainable growth will need both: sustainable quality by qualified people and sustainable economic activity.

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Key Points of Invited Speech

Inclusive Growth in Taiwan and Beyond

Albert K. Ting Chairman, CX Technology Corp. I am grateful this morning to share with you some thoughts on inclusive growth. I will first examine innovative inclusive growth policies that Taiwan has successfully employed in the ‘60s, ‘70s and ‘80s and their success in lowering income inequality. Next, I will give a brief overview on how our company has successfully adopted these policies to support growth and development in Vietnam over the last 25 years. In more recent decades, Taiwan’s growth rate has slowed. The final part of this paper seeks to identify what economic opportunities are available for inclusive growth going forward in Taiwan. Before my formal remarks, I just wanted to add that as a member of the Advisory Board of Global Economic Symposium, I am glad that we have continued to build and strengthen the reach and impact of GES in Asia with this second annual GES Taipei Workshop. Forward looking economic policies fostered growth and reduced inequality Taiwan instituted a suite of innovative policies in the 1960s, 70s and 80s that focused on improving physical and educational infrastructure, reforming tax systems, and encouraging export-led growth initially in OEM manufacturing industries and later in the technology sector. These policies significantly contributed toward the growth of the economy and the enlargement of the middle class. Over a 40-year period from 1952 to 1991, Taiwan achieved a 9% average annual growth rate. GDP per capita increased from US$50 to US$13,500 in the same period.1 In the midst of high growth, gini coefficient, which measures income inequality, had actually declined. Gini coefficient was at 0.32 in 1964 and was reduced to 0.277 in

1

. Ye, Wan-An. From Control to Open: the difficult process of economic liberalization in Taiwan. Taipei: Commonwealth Publishing Group, 2011. p. 183. 40

1980.2 Based on the 20:20 method, top 20% was earning 15 times that of the bottom 20% in 1954. But this was reduced to just 4.17 times in 1980.3 This accomplishment is significant and these policies are good roadmaps for inclusive growth. Export led growth strategy Taiwan established the world’s first export processing zone in 1965, setting up a tariff free, light industrial manufacturing park focusing on exports.4 Through this innovative concept, exports quickly grew from US$160 million in 1965 to US$3 billion in 1972. With significant manufacturing jobs created, unemployment fell from 6% in the 1950s to below 2% by the end of 1960s.5 Infrastructure investments to foster industrial development & sustain growth In 1973, Taiwan’s government began an unprecedented set of ten major infrastructure projects that laid the foundation for subsequent industrial growth. The main focus was on transportation infrastructure that included the first highway, electrification of rail systems, Taoyuan International Airport, Taichung Port, and Su-ao Port, but it also included heavy industrialization projects such as integrated steel mill, shipyard, oil refinery and its associated petrochemical complex, and a nuclear power station. Despite the external shocks such as the oil crisis of 1973 and 1979 and the de-recognition of Taiwan by the US government in 1979, Taiwan’s economic growth rate still averaged over 10.5% a year in the 1970s.6 Jump start tech sector through catalytic investments & first rate universities Taiwan laid down its foundation for growth in the technology sectors in the 1980s. Located next to two of Taiwan’s leading universities, Hsinchu High Tech Science Park began its operation in 1980. Hsinchu Science Park was the first government-planned park focused in IT. Government became the founding investor of Taiwan’s first semi-conductor company UMC in 1980, and invested in Taiwan Semiconductor Manufacturing Company (TSMC) in 1986. In the subsequent years, Taiwan became a world leader in technology related manufacturing, claiming global leadership positions in many products such as semiconductor foundry, IC packaging, PC/notebook/tablets, LCD monitors among others. ICT industry became the largest employer in the manufacturing sector of Taiwan, accounting for 1/3 of total manufacturing employment

2

. “Gini Coefficient of Income Distribution.” CGSDI. Directorate-General of Budget, Accounting and Statistics, Executive Yuan National Statistics, R.O.C. (Taiwan). Web. May 2015. 3 . Ye, Op. cit., p.194. 4 . “History of Processing Zone.”Introduction. Export Processing Zone Administration. Web. 5 . “Unemployment Rate.”Statistic. Department of Statistics, Ministry of Economic Affairs. Web. 6 . “GDP.”Statistic. Directorate-General of Budget, Accounting and Statistics, Executive Yuan National Statistics, R.O.C. (Taiwan). Web. May 2015 41

in 2012.7 Transplanting the Taiwanese growth experience to Vietnam 25 years ago when our company first went to Vietnam from Taiwan, Vietnam faced an inflation rate of 370%, high unemployment, and economic sanctions such as a US led trade embargo. Our company’s founder, Mr. Lawrence Ting devised a set of 3 infrastructure projects to transplant the Taiwanese growth experience to Vietnam. Job creation: introducing the first export processing zone to Vietnam Job creation was the initial focus to serve as a catalyst for growth. Working jointly with the Vietnamese government, we set up Vietnam’s first export oriented light industrial free-trade zone, Tan Thuan Export Processing Zone. From 1991, this joint venture with Ho Chi Minh City government has attracted 150 manufacturing companies from 15 countries and generated 65,000 jobs for the local economy. Total export value from Tan Thuan reached US$ 2.2 billion in 2014. Net export value reached half a billion US$, significantly bolster foreign exchange reserve of State Bank of Vietnam. Over time knowledge and skill content of workers have increased significantly. The export zone has brought prosperity to an area that was previously one of the lowest income neighborhoods in Ho Chi Minh City. Local crime rate has reduced over time as people prefer to seek productive employment in an area where no well-paid jobs were previously available. Infrastructure investments to encourage industrial growth As industrialization progressed, Vietnam soon faced electricity shortage in the mid to late 1990s. 500 power outages a month in Ho Chi Minh City was not uncommon. To address this issue, we invested US$375 million in the first 100% foreign owned power company in Vietnam, Hiep Phuoc Power Company. Our plant came on line in 1997/1998, just in time to help stabilize the electricity grid. We invested a further US$100 million to build the 17.8 km 10-14 lane Nguyen Van Linh Boulevard. This completed the southern ring road for the city and established a transportation connection between the ports of Saigon and National Highway 1. Catalytic development & education investments creating a new middle class The final project of the trio infrastructure ensemble is a southward urban expansion plan for Ho Chi Minh City that included residential/commercial neighborhoods, medical/education clusters, high-tech parks, and green space and parks. 7

. “Employment Statistics by Sector.”Statistic. Department of Statistics, Ministry of Economic Affairs. Web. May 2015. 42

From a piece of swamp land with no road access, no water nor electricity in 1993, the Phu My Hung development grew as local & international schools, universities, residential neighborhoods, hospitals, shopping malls, trade and exhibition center, office towers were developed. Today 50,000+ people from 40 countries live in our city center area. Over 10,000 service sector jobs have been generated as 40 bank offices, hundreds of restaurants and shop fronts opened. Nearby neighborhoods that were previously swamp- land have also been transformed as we share our best practices with others. Nearby projects emulating our development have created residential communities for a further 50,000 people. With these innovative projects in Vietnam, we have increased the knowledge content of products produced in the area, strengthened the skill set of workers in both manufacturing and service sectors, fostered the growth of leading education institutions, and facilitated hard working Vietnamese nationals to create a better future for themselves and their families. More importantly, since local Vietnamese own nearly all residential units, a new middle class has emerged as they see the value of their housing stock appreciated over time. Inclusive growth focusing on productive employment and long-term growth In the knowledge brief, What is Inclusive Growth, published by the World Bank, the authors stated: “inclusive growth approach takes a longer term perspective as the focus is on productive employment.”8 The Taiwan economic development experience from the 1950s to 1980s is an excellent real world example of this. The World Bank brief further stated “A high pace of growth over extended period of time is a necessary, and often the main contributing factor in reducing poverty.”9 IMF Working Paper (Kraay 2004) shows that “growth in average income explains 70 percent of the variation in poverty reduction in the short run, and as much as 97 percent in the long run.”10 Our investment projects in Vietnam over the last 25 years have shown that with a focus on sustained productive employment and board-based growth, poverty in the southern area of Ho Chi Minh City, Vietnam was reduced significantly. Service economy is the future of inclusive growth in Taiwan Since the 1990s, Taiwan’s economy has gone through significant transformation. The more important of the major changes is the growth of the service sector. Service sector’s 8

. Ianchovichina, Elena and Susanna Lundstrom. What Is Inclusive Growth? World Bank. February 10, 2009. p. 2. 9 . Ibid. p. 5. 10 . Kraay Aart. When Is Growth Pro-Poor? Evidence from a Panel of Countries. The World Bank, 2004. Web. May 2015. 43

share of GDP increased from 50% in 1987 to 68.2% in 2012 while that of the manufacturing sector decreased from 43% to 29.8% during the same period.11 GDP growth rate slowed from an average of 6.6% in the 1990s to an average of 4% since 2000.12 Inequality peaked in 2001 with gini coefficient of 0.35 but has since declined to 0.336 in 2013.13 However, there is a growing outcry of dissatisfaction in the society on income inequality. Going forward, additional sources of growth from the service sector need to be identified and developed. Opportunities in tourism, education, healthcare, financial and other services can yield additional inclusive growth for Taiwan. Different from export led growth where firms manufacture goods locally then ship them abroad, the ability to grow the service economy will very much depend on how Taiwan can attract more users of these services principally from abroad. Taiwan needs to think more creatively and act more boldly. The final part of this paper briefly summarizes inclusive growth opportunities in the areas of tourism and education. Tourism led inclusive growth: increase tourist arrivals to levels similar to Malaysia, Hong Kong, and Thailand In recent years with the warming of cross strait relationship, Taiwan’s tourist arrivals have increased from 3.8 million in 2008 to 9.9 million in 2014.14 However, if one looks at regional statistics, there is still much more room for growth in the tourism sector of Taiwan. In 2014 Thailand received 24.5 million and Malaysia received 28.1 million tourists respectively, while Singapore received 11.7 million tourists, and Hong Kong 27.8 million.15 Tourism led inclusive growth will be an effective way to create more jobs, developing work skills, and contribute to the growth of small and medium enterprises. An annual tourist arrival target of 25-30 million may be set as a medium term goal for Taiwan. Taiwan tourism’s contribution to GDP may grow from US$11 billion to current levels of Hong Kong and Thailand of US$26.4 billion to US$31.9 billion a year. This potential increase of US$15 billion to US$20 billion is significant and will represent a 3% - 4% increase in overall GDP.

11

. “Manufacturing Sector Statistics.”Statistic. Department of Statistics, Ministry of Economic Affairs. Web. May 2015. 12 . “GDP.”Statistic. Directorate-General of Budget, Accounting and Statistics, Executive Yuan National Statistics, R.O.C. (Taiwan). Web. May 2015. 13 . “Gini Coefficient of income distribution.”CGSDI. Directorate-General of Budget, Accounting and Statistics, Executive Yuan National Statistics, R.O.C. (Taiwan). Web. May 2015. 14 . “Visitor Arrival, 1956~2014.”Statistic. Tourism Bureau, M.O.T.C. Republic of China (Taiwan), 5 May 2015. 15 . “Country at a glance (2014).”WTTC DATA GATEWAY. World Travel & Tourism Council. Web. May 2015. 44

Education led inclusive growth: reverse decline of school enrollment with students from abroad Taiwan currently faces the challenge of lower birth rates, as a result the society is rapidly aging and there is a growing short fall in school enrollment. Taiwan currently has 150 universities and colleges but realistically the enrollment population will only support 2/3 of the schools.16 What to do with the excess capacity in education and prevent the loss of jobs in the education sector is a key priority. Compare to other universities in the region, student bodies of universities in Taiwan are much more homogeneous. For example the overall proportion of foreign students in universities in Singapore is 16%, where as Taiwan is at 3%.17 In 2014, there is only forty thousand degree seeking foreign students in Taiwan out of a total university level student body of 1.3 million students.18 There is also significant regional demand for higher education from near-by countries such as Vietnam, China, and Malaysia that does not currently have enough capacity to satisfy its own higher education demand. Also with a growing demand for Chinese language education, there are significant market growth opportunities for colleges and universities in Taiwan that will reverse the trend of decline in enrolment. Think innovatively and act boldly to achieve inclusive growth In conclusion, much more can be done to enable service-led inclusive growth in Taiwan. Opportunities exist far beyond tourism and education. With growth rates slowing down to 3.5%, government and private sector both need to think strategically and come up with innovative ways to encourage broad based growth that ensures advancements of equitable opportunities for the participants.

16

. Hu, You-Xin and Zheng, Yu-Qian. “Minister of Education said: Reduce Universities to 100.”Higher Education. Udndata.com. 30 Sep. 2014. 17 . “Percentage of International Students in Undergraduate Programs (Major) at NUS, NTU and SMU.” Parliamentary Replies. Ministry of Education Singapore, 8 July 2013. 18 . “International Students in Undergraduate Programs in Taiwan”Census and Statistics Department. Ministry of Education, 31 Mar. 2015. 45

Discussion Panels Panel 1: Promoting Innovation to Achieve Inclusive Growth Douglass Carmichael Strategy Consultant, Institute for New Economic Thinking (INET) The conference intro says: “A key driver of long-term economic growth is “innovation”. It creates new jobs and potentially raises productivity growth to support an upward development of wages over time. “ We have been in a fabulous period of innovation and the results are the opposite. The very idea of sustainable growth it Is a rhetorical trick. If we want to be optimistic we need to be much tougher, more innovative, more critical. The key to a better future for innovation in technology and Investment is more systemic thinking, paying attention to network effects and complexity dynamics. Seeing the world through the narrow apertures of silos, soda straws and blind professional alignments won’t do the job. This means innovation must move from isolated “industries” to highly participatory design. Innovation must move from the narrow technical to broader issues of governance and decision-making The standard future: growth plus education plus jobs leading to a fair sustainable society is getting in the way of real thinking and design. Lets look at key issues that intersect with “growth.”

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Growth and Climate. Growth requires the use of existing technologies which are known to pollute, both on the manufacturing side - making a new solar factory - and on the use maintenance and decommissioning side. We continue to ignore these even when we know they are important. Growth and Automation. The world-wide culture of enterprise managers is looking for ways to automate. Uber pays the drivers 80% of the fair, but if they owned the driverless car? All jobs all - are subject to automation, low end and high end and in the middle. Farming, mining, surgery, news article writing. Any increase in buying means competition for labor which means the incentive for robots increases. A robot is owned and all profits concentrate concentrated to owners, making inclusion, distribution in fairness more difficult. Growth and inclusion Inclusion. four issues. How to have people included in production included in income included in consumption included in access. Growth and inequality. Since jobs will not be a sufficient way to distribute income, how else? Guaranteed annual income through the state? Impact on growth? inequality means less purchasing power and hence less demand, but demand is met by automation and produces pollution. Finance, which should be close to a public utility, is in the US about 20% of all business activity and about 40% of all business profit. Crazy, creating a two class society. Growth and Governance. Concentration of wealth leads to under-investment as Piketty shows. But it also leads to governments being owned by wealth and the entire regulatory environment serves 47

the further concentration of wealth, not society. Growth and war. Growth leads to increased competition, competition means winners and losers. Can we really afford more losers? Desperation drives corruption. War is a struggle for resources and markets, and also is a hidden Keynesian support for the economy. Growth and Population. Clearly we are on the edge of migration wars, driven in part by increasing population that faces climate change and degrading environments. To not face these issues will be to continue the failure we are in. To face them is a tremendously difficult challenge. Embracing the challenge is the most hopeful path. That future will require high tech, especially nano-tech and bio tech and the internet of things and people to share best practices. A successful future probably means radical decentralization and centralization at the same time. The balance of these is a design problem we must take on. Innovation is helped by looking at facts, not sticking with highly conventional interpretations. Basically we must have investment that is green, lowers CO2, creates inclusion, faces inequality, avoids corruption. No growth or slow growth or alternative growth? Quite a challenge. If we keep doing business as normal, we become part of the momentum that prevents change. We must look past innovation that is limited technology but the way it is financed and owned, and how governance can help. We must distinguish between growth and the building a civilization that can the sustainable.

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Promoting ‘Creative Economy’for Connecting Successful Large Firms and Nascent Startups Do Hoon Kim President, Korea Institute for Industrial Economics and Trade Korea boasts of many large firms which have accomplished their success in global businesses in manufacturing sectors: Samsung Electronics, Hyundai Motors, LG Electronics, several shipbuilders including Hyundai, Daewoo and Samsung and POSCO (steel company) to name a few. In the past, they tended to share their success in the world market with domestic supplying SMEs, as they procured almost exclusively materials and components from their subcontracting SMEs. However, even though those large firms are continuously getting more successful outcome in the world market, it seems that domestic supplying SMEs are seeing their relation with large firms increasingly weakening these days. Large firms are reorienting their outsourcing from domestic sources towards international markets. All the more, they are rapidly relocating their production activities to other countries. Now, government and economists are talking about dichotomy of the economy or polarization between large firms and SMEs. At the same time, Korea’s large firms seem to start to be threatened by powerful Chinese firms in many above-listed manufacturing sectors. They are urged to find new products, new production processes and new services. On the other hand, Korean new startups have been suffering from non-existence of pertinent partners for their R&D efforts and business buildup process as well as heavy government regulations. Even though Korea saw an explosive boom of venture businesses during early 2000s, Korean startups (usually SMEs) has suffered from lack of capital and partners since then. The current government has launched the idea of establishing ‘creative economy’in order to connect those two dichotomized economic forces, globalized large firms and nascent startups. The Korean government is establishing ‘creative economy innovation centers’in many regional hub cities in the country by inviting large firms as partners for new business ideas and startups.

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Panel 2:

Encouraging Regional Inclusive Growth through Cooperative Innovation

Pun-Arj Chairatana CEO, Noviscape Consulting Group 1) Being faced with the high uncertainties and risks of innovation, how could countries work on joint cooperation to enhance their innovation intensity and through innovation to encourage a more equal regional development?

Ideas: Asia Pacific and beyond is region with diverse culture and wide gap of social and economic development. A current economic terrain hold countries together through supply and value chain management by MNCs from some Japan, Europe, and USA. The economic and innovation collaborative atmosphere in the region is full of cut-throat competition. Some economies in the region are going through process of technological upgrading and innovation development; an economic-led collaborative platform may be not an appropriate one to enhance equal regional development. However, this region shares some similar grand challenge: e.g. social disparity, natural disaster, urbanization, regional integration and economic bloc, economic migration, territorial conflict, labour and human right, and social diversity. Instead of, following a conventional idea of innovation collaboration through firm-based activities, there should have an alternative platform for social-technological innovation with wider range of key players to participate.

Solutions: 

Formulate idea from social and human issues, rather than an economic point-of view.

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Establish forum on public-private-and community innovation in order to bridge concept of inclusive development with innovation.

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Develop regional project on innovation for inclusive development through co-funding and multi-lateral supports.

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Engage new generation of start-up in emerging economies to tackle with innovations for the poor and vulnerable.

2) How could countries’heterogeneity in economic development, business models and societal customs and culture be better considered to create new chances for cooperation among themselves to encourage regional growth?

Ideas: As mentioned from the first question, shared- major challenges of the region, are great ingredients for such cooperation.

Solutions: 

City innovation programme

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Public sector innovation (e.g. digital government)

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Regional cloud funding

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Market intelligence support for new start-up and social enterprises

3) How to initiate and strengthen spillover effects of innovation on growth within and across countries?

Ideas: Shift centralized toward democratized and decentralized policy and management concepts and paradigms.

Solutions: 

Encourage national policy bodies in STI and economic development to develop regional and local innovation policy and supporting schemes.



Enhance regional science park, innovation centers, and co-working space to act as bridging agents for regional innovation sharing and marketing.



Develop regional summer school on techno-venture and innovation for inclusive development with financial support and scheme for high potential programmes and projects.

4) How to develop effective regional institutional and organizational innovation to support a more equal regional economics and societal development?

Ideas: Regional institutional and organizational innovations can be considered as high ambitious endeavor and very new to the region. An intangible nature of such 51

innovations may be barrier to gain support from key players like national governments and multi-national. By taking a point of departure from existing concept of corporate social responsibility (CSR), some new activities and be added on.

Solutions: 

Having position paper on regional institutional and organizational innovation



Propose regional institutions (APEC, ASEAN-COST, and etc.) to have action plan or blueprint in this matter.

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Promote concept of institutional and organization innovations among national governments, multi-national with clear description and benefit to boost-up awareness among top management and leaderships.



Develop regional-level case studies on institutional and organizational innovations.

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Inclusive Growth Tain-Jy Chen Professor of Economics, National Taiwan University Globalization has an effect of enhancing the value of talented people, depressing the value of ordinary people, and making under-privileged people almost useless. Globalization provides opportunities to talented people even if they live in remote and underdeveloped countries without relevant industries to use their talent. Meanwhile, ordinary people see their opportunities stripped away by competitors in lower-cost countries even if the relevant industries are nearby. Increasing income disparity between the “have” and “have not” (have talent or not) presents a serious challenge to all societies under globalization. This challenge cannot be met with a redistribution of capital or land, as the old-fashioned Socialist solution may have suggested. Nor can it be resolved by taxation or income redistribution as the core of the problem is opportunity rather than income or control over the production resources. Frustration over the lack of opportunities is particularly acute among the younger population as globalization advances over time. Inter-generation confrontation is now common across the world. The only plausible solution to lost opportunities is to create new opportunities, especially opportunities that can be grasped and realized by the ordinary people. These opportunities can be considered as “counter-globalization” opportunities. They have two import traits that allow them to stand against the tailwinds of globalization. One is local in nature; the other is small in scale. The opportunities generate activities that use location-specific materials in production or embody local culture, and end with some products can only be locally consumed. The activities must be free from economies of scale so that small operations can be as competitive as the large ones. The production is characterized by close interactions between producers and consumers These opportunities are not handy, but they certainly exist. However, new opportunities can only be created through innovations. In order to promote inclusive growth, it is essential to promote innovations that create business opportunities for local and small business operations. The scope of innovations should be set as large as possible, and include at least product, organization, and financing. In terms of product, both goods and services are covered as more opportunities may be associated with services. In terms of organization, both business and non-business organizations (such as social enterprise) can be conceived. In terms of financing, both conventional and non-conventional financing schemes (such as internet 53

financing) can be explored. The key is to mobilize local resources of all forms to organize local production that meet local needs. When globalization led to uneven utilization of local resources, a counter force must be found to make use of the under-utilized resources. Because under-utilized resources are cheap, being able to use them make a good business sense.

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Tony Nash Chief Economist at Complete Intelligence Innovation by its nature implies that there are initial winners –those who innovate – but eventually others benefit, hopefully those users who will benefit from market transparency, lower cost capability, or higher quality outcomes. These are not necessarily mutually exclusive outcomes, but I have assumed they are on the three examples below. Those innovations that deliver market transparency (the internet, supply chain innovations, etc) will result in more equitable economic and societal growth for those who can access these innovations. With this, a common story is the one about sms technology allowing farmers to know market prices so they can sell their goods at a higher rate, removing economic rents (and margins) from the local bulk buyer and allowing individual farmers a stronger negotiating position. Those innovations that deliver lower cost capability help lower income populations benefit from items that were previously inaccessible. Here, the low cost ECG and ultrasound machines that GE started distributing almost 10 years ago seem to be among the most dramatic. This gave consumers in least developed markets access to technologies that were previously inaccessible and improved healthcare outcomes dramatically. We have seen this with mobile phones, cars and many other items. The final type of innovation is around higher quality outcomes. Here, the benefits have fewer spillover effects. In many cases, innovations in pharmaceuticals are so expensive that a fraction of a percent of the global population could actually afford them. This sector is one in which many innovations are too costly for low and middle income countries to gain benefits. Here, we have seen some countries invalidate patents and allow generics in violation of patent practices in order to have beneficial, societal spillover effects. This is certainly one way –although controversial –to gain benefit. Regardless of the modality of innovation, gaining spillover effects through various forms drives economic and social benefits. Strengthening these spillover effects may require government and corporate assistance, which can take form of subsidies for education, R&D, industry protection, consumption subsidies (healthcare or consumer goods), etc.

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There are also opportunities for government and companies to support through direct investment. In some cases, the spreading of supply chains across the region may help countries with low costs, for example, benefit from FDI as a vehicle to drive innovations in public health, transport, education and competition. This may have started as Corporate Social Responsibility in the 1990s, but much of this has evolved to simply good, sustainable supply chain strategy. This type of support can also take contribution from multilateral banks, like the ADB and the emerging AIIB. Finally, foreign aid is another mode for diffusion of innovation and its beneficial spillovers. In 2006, I was part of a USAID project that built entrepreneurial, technology-based business models in rural Sri Lanka during the civil war. The work was done largely in villages in Sri Lanka to build wireless broadband networks so the local populations could access distance learning, telemedicine and voice over IP (actually illegal in the country at the time, but legitimized with regulatory frameworks shortly after the project launched). This allowed low income populations to access new technologies and maximize their disposable income by extending their communications and education capabilities. During this project, the cost of a call from a Sri Lankan family to reach their parent or sibling working in the Middle East was reduced by 7 times, largely as a result of our efforts to bring VoIP competition to the telecom market. The project was distributed through a franchise model, so village level entrepreneurs would generate revenue and employ workers to bring these new services to the community. This is just one way that foreign aid closes the gap while diffusing the benefits of innovation.

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Qiyuan Xu Director of Economic Development Division, Institute of World Economics and Politics (IWEP), Chinese Academy of Social Sciences (CASS) Both developing and developed economies are facing problems of inclusive growth. But the solutions, especially the key points could probably be different. For a developing country like China, most of the structural problems such as income inequality, regional disparity, pollutions, overcapacity, results mainly from regulations and consequently distortions. In order to solve such kind of problems to fulfill the inclusive growth, deregulations are most important. How to implement deregulations could hardly be an innovation in theoretical way, because there are many experiences and lessons in the international history. If there is institutional or organizational innovation for the case of China, that is mostly about how to put the foreign experiences into local/domestic practices. Figure 1 shows the coexistence of unemployment for high-educated labor force and vacancy ratios for the low–educated labor force. In 2014, unemployment among the tertiary educated labor force (or higher) is 12 per cent. The vacancy ratio among the secondary educated labor force (or lower) is 18 per cent. The high education labors have not benefited from the growth for many years. It becomes a serious problems for the government. To understand why this is so it is essential to examine the services industry. Employment here represents only 34 per cent of the total workforce, compared with 60 per cent in Malaysia and 81 per cent in the U.S (Figure 2). Based on China’s position on a typical development path, one would expect the service sector to account for about 50 per cent of today’s jobs (in the way of expectation value). The deficit is particularly apparently shown in Figure 3. China’s employment ratio is lower in education, banking and insurance, scientific research, polytechnic services and, especially, in water conservancy, environment and public utility management, health care, social security and social welfare. For the above service sectors, there should be some priorities. For example, health care, social security and social welfare are much more urgently to be developed than education, according to the aging population trend. In order to make these service industries more competitive and increase their capacity, Chinese authorities should do well to set them free of excessive regulation, and bolster transparency. Reforms to establish a sound social welfare system are also necessary. At this point in time, the development of the service sector will produce more job 57

opportunities which can then release the human capital bonus, and consequently enhance potential growth.

Figure .1 Structural problems in China’s labor market Calculated by the author. Source: China's Ministry of Human Resources and Social

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Figure .2 China’s employment in service sector is inhibited Source: World Bank, World Development Indicator Online.

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Figure .3 Structure of employment in service sector: a comparison between China and US. Source: China's Ministry of Human Resources and Social Security, United States Department of Labor. Note: The data shown in the figure is the difference between the employment ratio in an industry in China and US.

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