Taiwan Surpasses South Korea in Per Capita GDP for the First Time in 18 Years

For the First Time Since 2004, Leading
"Semiconductor Industry Growth Influenced by Won Depreciation"

Taiwan has surpassed South Korea in GDP per capita for the first time in 18 years.

According to a report by Taiwan Central News Agency on the 28th, Taiwan's GDP per capita last year was $32,811 (approximately 43.9 million KRW), higher than South Korea's $32,237 (approximately 43.13 million KRW).

The Statistics Department of Taiwan's Ministry of Economic Affairs explained, "Taiwan and South Korea have similar population densities, economic development models, and industrial structures," adding, "Taiwan has achieved an average annual growth rate of 3.2% over the past decade through its semiconductor industry's superiority and proactive corporate changes, surpassing South Korea's average annual growth rate of 2.6%." They further analyzed, "The rapidly narrowing GDP per capita gap and the depreciation of the Korean won led to this reversal."

Street scenes of Taipei, the capital of Taiwan [Image source=Pixabay]

According to the Statistics Department, both Taiwan and South Korea have export-oriented industrial structures. Manufacturing plays a key role, but the development trends in recent years have been quite different. The share of manufacturing value-added in Taiwan's GDP increased by 5.1 percentage points from 29.1% in 2013 to 34.2% last year. In contrast, South Korea's share decreased by 2.2 percentage points from 27.8% to 25.6%.

In Taiwan's manufacturing sector, the share of the electronics and precision instruments industry was 54.8% in 2021, up 9.4 percentage points from 2013. The average annual growth rate of this sector was 8.7%, exceeding the overall manufacturing average of 5.5%.

South Korea had a relatively lower share of electronics and precision instruments within its total manufacturing sector. Over the past decade, the average annual growth rate of its entire manufacturing sector was only 2.8%.

Taiwan's manufacturing value-added ratio surpassed South Korea's from 2015 and reached a record high of 32.5% in 2020. South Korea remained at 28.7% during the same period. Taiwan's fixed investment also grew at an average annual rate of 5.7% from 2013 to 2022, outpacing South Korea's 2.8% average annual growth rate.

The Statistics Department stated, "Over the past five years, Taiwan increased investments to strengthen industrial competitiveness in response to the US-China trade war and the spread of COVID-19," adding, "Taiwan's average annual export growth rate over the past decade was 4.6%, higher than South Korea's 2.2% and the global average of 3.0%."

South Korea's export volume, which was 1.8 times that of Taiwan in 2013, narrowed to 1.4 times last year. Taiwan also posted a trade surplus of $51.4 billion last year, supported by its semiconductor industry's dominance. South Korea recorded a trade deficit of $47.8 billion due to factors such as China's COVID-19 lockdowns, its largest trading partner, and rising energy import costs.