Taiwan has advantages for the development of "Knowledge-Intensive Industries". Taiwan's potential in science and technology is growing rapidly, which plays a key role in leading the transformation of Taiwan economy. According to the IMD's World Competitiveness Yearbook 2010, Taiwan has the world's third most entrepreneurial society. Entrepreneurship could be a reflection of business creativity, innovation and value of creation, which also determines a country's economic vitality and key competitiveness. There would be a positive correlation between entrepreneurship ranking on the IMD report and the domestic investment rate.
Taiwan's industries are transforming from efficient mass production (supply chain) to living application innovation (product/system/service). The manufacturing and services industries will be the focused areas, which include the front end R&D services industry and the back end financial and transportation services industries. The services industry, including "service-oriented manufacturing" and "services outsourcing", is being actively developed and innovated. In particular, the health care industry and alternative energy industry both have good opportunities to enter China's market.
R&D and innovation represent the world's commitments on creation of new knowledge and exploration of research results. Taiwan ranks 6th in the world on EIU's Global Innovation Index 2009-2013, behind only to Japan, Switzerland, Finland, Germany and the US, and number one among newly industrialized countries. The US, Japan, China, Germany and France ranked top five globally for Gross Expenditure on R&D (GERD) in 2006. Taiwan's GERD was USD16.55 billion in that year, ranked 11th among the 39 countries surveyed, which included the major OCED countries, Singapore, mainland China, Russia and Israel. On the "R&D Strength" (defined as the ratio of GERD to GDP) area, the ratio of GERD to GDP in Taiwan increased from 2.31% in 2003 to 2.62% in 2007. On the "R&D Fund Sources" area, the major source was the private sectors (67.15% in 2006), followed by the government (31.41%), indicating the importance of the private sectors' role in innovation. The government's GERD will increase by 10% annually. By 2012, the R&D strength (the GERD/GDP ratio) is expected to reach 3%.
Moreover, Taiwan's performances were outstanding in the world's invention award competitions: it was in number one position at the 2011 "International Exhibition of Inventions of Geneva". The Taiwan team won 42 gold, 34 silver, 5 bronze medals, and six special prizes, successfully defending its championship title in the awards/entries ratio. Moreover, in 2011 June, Taiwan won 26 gold, 12 silver and 5 special awards at the 26th Invention & New Product Exposition (INPEX) in Pittsburgh, Pennsylvania, making it the biggest winner among the 15 countries which competed at one of America's largest invention trade shows. Last, in Feb. 2012, three products from Taiwan received iF gold awards from German-based International Forum Feb. 10 in recognition of their outstanding design concepts. It indicates that invention, design and innovation have become valuable in Taiwan Society.
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