In the past two weeks, Latin American and Caribbean countries have taken important steps in developing their digital economies. On Nov. 1, President Biden and 11 country leaders agreed to establish a Center of Excellence in Costa Rica, which will provide regional workforce development in semiconductors, AI, 5G, cyber and other emerging technology. A few days later, El Salvador and Costa Rica hosted a high-ranking U.S. Commerce Department official to discuss digital development.
As these countries work with the United States on such developments, they can also look to another key leader in the global digital economy: Taiwan.
Less than three decades ago, Taiwan was ruled under martial law. Chiang Kai-shek, who led the Kuomintang government when it lost to the Chinese Communist Party in 1949, ruled with an iron fist for decades. His government curbed civil liberties and squashed dissent. Youth movements and international condemnation eventually pressured the government to modernize, and in 1996 Taiwan had its first free and fair presidential elections. Today, it is a vibrant democracy with four candidates vying for the presidency in January. Taiwan is a world leader in advanced semiconductors and information and communication technology, with even U.S. firms like Nvidia going there to learn from the semiconductor masters.
How was Taiwan able to transform itself from a dictatorship to technological democracy in less than 30 years, and what can Latin America and the Caribbean learn from the Taiwan model?
At a recent Miami event, Charles Chou director general of Taiwan’s Economic and Cultural Office in Miami, explained. “Taiwan has little natural resources, but we invested a lot in our human resources,” he said. All students complete 12 years of primary and secondary education, and more than 80% receive post-secondary education. By contrast, just 63% of Latin American and Caribbean children finish secondary education, and there is gross inequality in education outcomes between the richest and poorest students in the region.
The second factor is government’s long-term vision. In the 1980s, the government decided that Taiwan should specialize in semiconductor manufacturing. It courted Morris Chang, then working at Texas Instruments, to return and start a semiconductor company. That became the Taiwan Semiconductor Manufacturing Company, which now produces 90% of the most advanced semiconductors in the world.
The third factor is the Taiwanese work ethic. Chou recounted a story about a friend who received a phone call from his boss in the middle of family dinner saying that he was needed at the office right away. The friend simply excused himself and left his home immediately, a demonstration of the kind of sacrifices Taiwanese workers make to get the job done.
Latin American and Caribbean countries can empathize with Taiwan’s history. Many countries also suffered under the mano dura policies of caudillos, or strongmen. Since then, democracies have made meaningful progress, but in recent years there has been concern about democratic backsliding.
The region’s nations should follow the Taiwan model. First, they can boost investments in early education in STEM, which will make them more competitive in the AI future. Second, country economic ministries and regional organizations should invite Taiwan business delegations to consult on the regional Center of Excellence. Since Miami is already home to many regional businesses and aspires to further develop its role as a tech hub, Taiwanese companies should consider expanding its AI-tech footprint in Miami, as well.
Third, they can persuade Taiwanese companies to invest in semiconductor factories there. Back in June, Mexico hosted a Taiwanese delegation to discuss investments in microchip capacity for automotive and manufacturing; this is a great start, and other countries should follow suit. Panama and Costa Rica are also already working with the United States on being semiconductor supply chain hubs; they should also consult with Taiwanese companies as they develop these hubs.
Fourth, regional universities, including those based in South Florida, should seek out academic partnerships with Taiwanese universities in information and communications technology — ICT — semiconductors and AI.
In building out such partnerships, Taiwan’s remaining seven diplomatic allies in the region have a competitive advantage. Taiwan has already helped train hundreds of people across the region in ICT, and has helped finance broadband to hundreds of homes as well. Other countries that still maintain economic relations with Taiwan can leverage the various economic offices in their countries to facilitate such opportunities.
Of course, there is the elephant in the room. The People’s Republic of China would certainly object to any of these ideas, and will most likely retaliate through economic coercion. Regional leaders have long said that they don’t want to choose sides between the United States and China and that they want to maximize economic benefits from both countries. Why not try to maximize such benefits with Taiwan? And if country leaders make decisions based on fear of retaliation from a so-called “strategic partner,” they must ask themselves if that’s truly the kind of partner they want.
Latin American and Caribbean leaders can also look to Taiwan, the “Island of Resilience.” That island can help the region achieve true advancements in the digital economy of today and tomorrow.
Leland Lazarus is associate director of research at Florida International University’s Jack D. Gordon Institute of Public Policy. He is also the nonresident fellow of the Atlantic Council’s Global China Hub.