US economist Krugman’s message is resonating in Taiwan

In an attempt to stem Taiwan’s economic meltdown the government has implemented many of the economic theories of US economist and 2008 Nobel Laureate Paul Krugman. In fact, this month, Vice Premier Chiu Cheng-hsiung will preside over a symposium at which Krugman will give the keynote address.

Scheduled to visit Taiwan on May 14th and 15th, Krugman will speak at the Taipei International Convention Center to an audience of academics, government and industry leaders. Invited by Taiwan Financial Holdings and other daily newspapers, the visit will provide Krugman with an opportunity to understand what Taiwan has done to tackle the current financial crisis.

Chiu said Krugman would find his economic theories implemented in Taiwan, including recovery of banks’ lending ability and an increase of public spending. To deal with the current financial crisis, the Taiwan government has relied on the trickle down effect of three policies – support for banks, support for businesses, and support for workers. The government fully guarantees the security of savings deposits, thus stabilizing the banks’ US$814 billion worth of deposits. While the US has spent over US$800 billion to bailout the American banking system, Taiwan has not wasted a cent.

Taiwan’s stimulus plan and its programs are all meant to revitalize domestic consumption and increase spending. This year’s increase in public spending will not only stimulate the island’s economy, but also improve infrastructure. Pointing out that the global economic crisis was created by a combination of negative factors coming to a head simultaneously, Chiu predicted that the worst of Taiwan’s economic recession is now over.