2023 Index of Economic Freedom

Taiwan

OVERALL SCORE80.7
WORLD RANK4
Rule of Law

Property Rights81.9

Judicial Effectiveness94.7

Government Integrity76.3

Government Size

Tax Burden79.3

Government Spending91.1

Fiscal Health93.6

Regulatory Efficiency

Business Freedom84.3

Labor Freedom69.1

Monetary Freedom82.5

Open Markets

Trade Freedom85.8

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 23.4 million
  • GDP (PPP):
    • $1.5 trillion
    • 3.8% 5-year compound annual growth
    • $62,527 per capita
  • Unemployment:
    • 3.8%
  • Inflation (CPI):
    • 1.8%
  • FDI Inflow:
  • Public Debt:
    • 28.4%

Taiwan’s economic freedom score is 80.7, making its economy the 4th freest in the 2023 Index. Its score is 0.6 point higher than last year. The island economy is ranked 2nd out of 39 economies in the Asia–Pacific region.

Taiwan’s economy is rated “free” in the Index. A strong commitment to the rule of law and openness to global commerce have enabled it to become a global leader in economic freedom. The dynamic economy has benefitted from a well-developed institutional framework, a tradition of private-sector entrepreneurial dynamism, and open-market policies that facilitate the free flow of goods and capital.

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Background

Taiwan’s multiparty democracy operates under a 1947 constitution that was intended to include all of China. Its economy is one of Asia’s wealthiest. The Democratic Progressive Party returned to power when Tsai Ing-wen was elected president in 2016. In 2020, against the backdrop of the 2019–2020 Hong Kong protests and threats from China, Tsai secured reelection in a landslide victory. China’s ongoing attempts to isolate Taiwan diplomatically hinder its economic growth and threaten its presence in overseas markets. Taiwan’s trade-dependent economy is driven by a competitive manufacturing sector that encompasses electronics, machinery, petrochemicals, and information and communications technology products.

Rule of Law

Property Rights 81.9 Create a Graph using this measurement

Judicial Effectiveness 94.7 Create a Graph using this measurement

Government Integrity 76.3 Create a Graph using this measurement

The overall rule of law is well respected in Taiwan. The country’s property rights score is above the world average; its judicial effectiveness score is above the world average; and its government integrity score is above the world average.

Government Size

The top individual and corporate tax rates are, respectively, 40 percent and 20 percent. The tax burden equals 8.1 percent of GDP. Three-year government spending and budget balance averages are, respectively, 17.2 percent and –1.7 percent of GDP. Public debt equals 28.4 percent of GDP.

Regulatory Efficiency

Overall business freedom is well protected under an efficient regulatory environment, and no minimum capital is required to establish a business. The labor market lacks flexibility, and the minimum wage has been rising since 2017. Monetary stability has been well maintained despite inflationary pressure.

Open Markets

The trade-weighted average tariff rate is 2.1 percent, but nontariff barriers add to the cost of trade. Foreign investment is welcome, and the overall investment framework has become more streamlined. The financial sector continues to evolve and provides a wide range of financial services.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Singapore83.9-0.5
2Taiwan80.70.6
3New Zealand78.9-1.7
4Australia74.8-2.9
5South Korea73.7-0.9
6Japan69.3-0.6
7Samoa68.30.0
8Malaysia67.3-0.8
9Brunei Darussalam65.70.9
10Indonesia63.5-0.9
11Micronesia62.61.6
12Vanuatu62.1-0.8
13Kazakhstan62.1-2.3
14Vietnam61.81.2
15Mongolia61.7-2.2
16Thailand60.6-2.6
17Tonga60-0.8
18Philippines59.3-1.8
19Bhutan59-0.3
20Kiribati58.8-0.4
21Fiji581.6
22Solomon Islands56.90.4
23Uzbekistan56.50.8
24Cambodia56.5-0.6
25Kyrgyz Republic55.80.0
26Bangladesh54.41.7
27India52.9-1.0
28Sri Lanka52.2-1.1
29Papua New Guinea51.7-2.9
30Nepal51.41.7
31Tajikistan50.60.9
32Laos50.31.1
33Pakistan49.40.6
34China48.30.3
35Timor-Leste47.20.9
36Maldives46.6-0.7
37Turkmenistan46.50.3
38Burma46.5-3.1
39North Korea2.9-0.1
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