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Fed's sharp rate cut sparks economic concerns; Global economy clouded by multiple challenges
Mixed performance in manufacturing and services sectors amid multiple factors |
The global economy is experiencing gradual expansion, with inflationary pressures continuing to ease. However, the manufacturing sector has yet to show significant recovery. Additionally, recent divergences in interest rate policies among major economies and the unwinding of yen carry trades have intensified volatility in global financial markets.
In Taiwan's domestic manufacturing sector, as the peak season for new product preparation by international brands approaches, August exports reached record highs. However, due to the impact of lower international oil prices on petrochemical product prices and persistently weak demand, surveyed manufacturers reported declines in transaction prices for both domestic and export products, production activities, and new order volumes compared to the previous month's survey, leading to a worsened outlook for the current and latter half of the year of the manufacturing sector.
In the service sector, the onset of the Ghost Month in the lunar calendar has led to divergent performance between essential and non-essential consumer goods. The summer peak season boosted August revenues significantly in the food and beverage industry. However, the cooling of domestic tourism has affected the outlook of accommodation and food service activities. Volatile stock market performance and shrinking transaction volumes have led to declining profits for securities firms, with most securities industry players pessimistic about the current month's economic performance. ...Read more |
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| Corporate pay incentives: little impact on market salary rates |
| The Securities and Exchange Act amendment mandates that listed companies allocate a specific portion of annual profits for employee salary increases or profit sharing, allowing employees to partake in operational success while providing tax incentives for businesses. However, both theory and empirical evidence suggest that encouraging profitable companies to raise wages has limited effect, which can be evaluated from five perspectives:1.Economic rationale for addressing market failures 2.Actual implementation of wage increases or profit distribution 3.Magnitude of raises compared to scenarios without this policy 4.Potential for unjustified corporate tax reductions 5.Capacity to significantly influence wage increases in other companies. Numerous factors influence profits, not all attributable to labor or management contributions. Mandating higher profit allocation to workers lacks a theoretical basis in market failure, and setting ratios too high may excessively interfere with free markets. Furthermore, different labor market assumptions yield varying theoretical outcomes. Assuming homogeneous worker quality, partial wage increases without employment changes, and initially above-equilibrium wages, demand curves typically won't shift uniformly upward, leaving market equilibrium wages unchanged. Heterogeneous worker quality further complicates the analysis, potentially diminishing the policy's wage-boosting effects across other firms. Wages naturally rise with improved corporate profitability and labor productivity. Policymakers risk overlooking more effective measures and efforts if they fail to carefully consider these issues.(For more, please see the current monthly journal) |
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Taiwan Economic Research Monthly
Strategic Analysis: Leveraging Emerging Technologies to Drive Innovation and Growth in Taiwan's Industries |
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Global economic challenges such as geopolitical tensions, supply chain restructuring, climate change, and aging populations have emerged in recent years. Simultaneously, the rise of generative AI has created new opportunities for Taiwan in emerging technologies and related industries. Given limited resources, Taiwan must focus on niche technological areas with potential, leveraging its strengths to maintain competitiveness in the rapidly evolving AI era. AI and other emerging technologies have advanced rapidly, with global investment in research, development, and application across sectors like healthcare, finance, manufacturing, and retail. These technologies have shown the potential to enhance efficiency and create new business models. As a key Asian tech hub, Taiwan faces the challenge of harnessing this technological revolution for local industrial innovation and development. This month's featured articles analyze strategies used by the US, EU, China, and South Korea to drive innovation and growth through emerging technologies. They explore Taiwan's direction in technology development amid the AI wave, examining how these advancements can boost industrial innovation and economic growth. The articles also discuss strategies for reinforcing Taiwan's position in the global tech landscape and elevating its industrial economy to new heights.
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