Taiwan's Economy

Taiwan is the 17th largest economy in the world, 14th largest exporter and 16th largest importer,
and the third largest holder of foreign exchange reserves, with over US $180 billion.

After 1949 Taiwan's productivity in agriculture increased.  This was a result of land reforms that
were initiated by Chiang Kai-shek after his KMT government moved from Nanjing to Tai'pei. 
Foreign investment was important to Taiwan during the 1960s, so they developed export
processing zones with some enticements designed to bring in more foreign investors.  The
emphasis slowly moved to technology or capital-intensive commodities from that of labor-
intensive goods during the 1980s.  Deregulation of various financial areas (banking, stock market,
trade, finance, etc.) during the 1990s was an attempt to liberalize the economy and was a sign of
Taiwan's desire to join the World Trade Organization.

It is apparent these policies have been successful as Taiwan has one of the world's highest
standards of living.  Also one of Asia's "Four Tigers", along with South Korea, Singapore and
Hong Kong, Taiwan's per capita gross national product (GNP) rose from $1100 in the 1950s to
approximately $11,600 in the 1990s.  The gross domestic product during the 1990s was $216.5
billion, with manufacturing accounting for about 37 percent, and services make up the largest
portion with about 60 percent.

Taiwan has had one of the fastest growing economies for the past five decades, and its
development has been praised as an "economic miracle."  Taiwan has gradually high-teched its
industries over the past two decades and currently has the fourth largest information hardware
and semiconductor industries in the world.  Innovative, high-quality "Made in Taiwan" products
are sold worldwide.  In January 2002, Taiwan joined the World Trade Organization (WTO),
becoming an official partner in the world trading system.  Today, the government is vigorously
promoting a knowledge-based economy and industrial modernization to transform Taiwan into a
"green silicon island" of high value-added production.

Macroeconomic Indicators

Taiwan's gross national product (GNP) in 2002 was US $289.3 billion, with per capita GNP
reaching US $12,916.  That same year, gross domestic product (GDP) was US$281.9 billion. 
Agriculture's contribution to the economy continued to shrink, accounting for only 1.86 of the
GDP.  The industrial sector's share of the GDP also dropped, going from 31.09 percent in 2001 to
31.05 percent in 2002.  Meanwhile, at 67.10 percent of the GDP, the service sector continued to
constitute the bulk of Taiwan's economy and employed the largest share of the workforce at 57.3
percent.

Trade

A lack of natural resources and a relatively small domestic market have made Taiwan dependent
on foreign trade, which constitutes over 80 percent of the GNP.  Consequently, this has allowed
Taiwan to generate one of the world's largest foreign exchange reserves.  In 2002, Taiwan's
foreign trade totaled US $243.1 billion, with exports increasing by 6.29 percent to reach US
$130.6 billion and imports rising by 4.94 percent to hit US $112.5 billion.

Exports

The United States, Hong King and Japan are the top buyers of Taiwan products, accounting for
53.3 percent of total exports in 2002.  Major export products include electrical machinery,
mechanical appliances, plastics, textiles and iron and steel.

In 2002, Taiwan's exports to Hong Kong totaled US $30.9 billion, up 14 percent from the
preceding year, primarily due to indirect trade with China.  This resulted in a US $29.1 billion
trade surplus with Hong Kong, which imported 23.6 percent of Taiwan's exports that year.

Exports to the United States totaled US $26.8 billion in 2002, resulting in a trade surplus of US
$8.63 billion.  Reliance on the US has decreased in recent years due to Taiwan's economic
liberalization and internationalization.  Fifteen years ago, over 40.0 percent of Taiwan's total
exports went to the US; in 2002, this figure has dropped to 20.5 percent.

Europe has long been a target of Taiwan's market diversification policy.  In 2002, exports to
Europe totaled US $18.6 billion, accounting for 14.2 percent of Taiwan's total exports.  In the
past, Taiwan usually registered a trade deficit with Europe; however, this situation has been
reversed since 1999.  In 2002, Taiwan's surplus with Europe was US $3.9 billion.

With the establishment of the Association of Southeast Asian Nations (ASEAN), Southeast Asia
has emerged as a new market for Taiwan and the second favorite place for Taiwan investors
after China.  In 2002, exports to ASEAN countries accounted for 12.2 percent of Taiwan's total
exports.

Imports

In 2002, the aggregate value of Taiwan's imports was US $112.5 billion, up 4.94 percent from the
preceding year.  Major imports include electrical machinery, mechanical appliances, mineral
fuels, and precision instruments.  The leading source of imports is Japan, which in 2002
accounted fro 24.2 percent, or US $27.3 billion, of total imports.  Many Taiwan industries rely
heavily on parts and manufacturing technology from Japan, particularly the information and
automotive industries.  Although there have been a few exception, imports from Japan have
grown almost continuously, leading to a serious trade deficit.  Today, imports from Japan are
many times larger than they were 20 years ago, rising from around US $3.0 billion in the 1980s to
US $27.3 billion in 2002.

Taiwan's second largest supplier is the United States, which accounted for 16.1 percent, or US
$18.1 billion, of total imports in 2002.  Collectively, countries from ASEAN provided 14.7 percent
of Taiwan's imports in 2002, while imports from Europe accounted for 13.0 percent.
Economic Ties with China

Despite the absence of direct transportation links, economic ties between the two sides of the
Taiwan Strait have grown considerably over the past decade.  According to the Mainland Affairs
Council, the value of two-way trade for 2002 was US $37.4 billion.  Taiwan's exports to China,
which consist mainly of industrial raw materials and components, increased by 34.3 percent over
2001 to account for 78.8 percent of indirect trade, or US $29.45 billion.  Imports from China
accounted for the remaining 21.2 percent of indirect trade, growing by 34.7 percent to reach US
$7.95 billion.

Between 1991 and 2002, government-approved investments in China totaled US $27.3 billion,
making the area the top choice for investment by Taiwanese companies.  Many Taiwanese
manufacturers in the labor-intensive, electronics, and IT industries have set up factories in China
to take advantage of its cheap labor and low overhead costs.  Many of these manufacturers
received their orders in Taiwan, produce their goods in China, and then ship the finished products
directly from their factories in China to overseas buyers.

As the market in China continues to open, more and more large Taiwanese enterprises in the
information plastics, and food and beverage industries are setting up large-scale projects in
China.  As Taiwanese businessmen invest in activities other than export manufacturing,
investments have begun to spread beyond the eastern coasts of Fujian and Guangdong
Provinces.  Today, Taiwanese enterprises are moving inland and establishing offices in China for
handling real estate, insurance, banking and tourism.

Over the past few years, trade dependence on China has become a major concern.  In 2002,
China accounted for approximately 15.4 percent of Taiwan's total trade volume  (22.6 percent of
7.1 percent of Taiwan's exports and imports, respectively).  The mass exodus of Taiwanese
businesses to China prompted the government to adopt the "No haste, be patient" policy on
China-bound investments in 1996.  Despite the concern, however, this policy was replaced in
August 2001 with the more liberalized policy to "Proactive liberalization with effective
management."
 Israel’s Economy

Israel has a diversified, technologically advanced economy with substantial but

decreasing government ownership and a strong high-tech sector. The major industrial
sectors include high-technology electronic and biomedical equipment, metal products,
processed foods, chemicals, and transport equipment. Israel possesses a substantial
service sector and is one of the world's centers for diamond cutting and polishing. It also
is a world leader in software development and, prior to the violence that began in
September 2000, was a major tourist destination.

Israel's strong commitment to economic development and its talented work force led to economic
growth rates during the nation's first two decades that frequently exceeded 10% annually. The
years after the 1973 Yom Kippur War were a lost decade economically, as growth stalled and
inflation reached triple-digit levels. The successful economic stabilization plan implemented in
1985 and the subsequent introduction of market-oriented structural reforms reinvigorated the
economy and paved the way for rapid growth in the 1990s.

A wave of Jewish immigration beginning in 1989, predominantly from the countries of the former
U.S.S.R., brought nearly a million new citizens to Israel. These new immigrants, many of them
highly educated, now constitute some 13% of Israel's 6.7 million inhabitants. Their successful
absorption into Israeli society and its labor force forms a remarkable chapter in Israeli history. The
skills brought by the new immigrants and their added demand as consumers gave the Israeli
economy a strong upward push and in the 1990’s, they played a key role in the ongoing
development of Israel's high-tech sector.

During the 1990s, progress in the Middle East peace process, beginning with the Madrid
Conference of 1991, helped to reduce Israel's economic isolation from its neighbors and opened
up new markets to Israeli exporters farther afield. The peace process stimulated an
unprecedented inflow of foreign investment in Israel, and provided a substantial boost to
economic growth in the region over the last decade. The onset of the intifada beginning at the
end of September of 2000, the downturn in the high-tech sector and Nasdaq crisis, and the
slowdown of the global economy have all significantly affected the Israeli economy. However,
despite the recent conflicts in Gaza and Lebanon, the Israeli economy grew during 2006.
Israeli companies, particularly in the high-tech area, have in the past enjoyed considerable
success raising money on Wall Street and other world financial markets; Israel ranks second to
Canada among foreign countries in the number of its companies listed on U.S. stock exchanges.
Israel’s tech market is very developed, and in spite of the pause in the industry’s growth, the high-
tech sector is likely to be the major driver of the Israeli economy. Almost half of Israel’s exports
are high tech. Most leading players, including Intel, IBM, and Cisco have a presence in Israel.

Growth was an exceptional 6.2% in 2000, due in part to a number of one-time high tech
acquisitions and investments. This exceptional year was followed by two years of negative growth
of -0.9% and -1%, respectively, in 2001 and 2002. As a result of the security situation and the
associated downturn in the economy, there was a significant rise in unemployment and wage
erosion. This led to a decline in private consumption in 2002, the first time that there had been
negative private consumption since the early 1980s. However, following growth rates of 1.7% in
2003 and 4.4% in 2004, the Israeli economy entered into a period of stabilization and recovery
after the deep recession of 2001 and 2002. Since then, the Israeli economy seems to have
returned to a trend of consistent growth. The Israeli economy grew by 5.2% in 2005 and GDP per
capita (U.S. $17,800) increased by 3.3%. The Israeli economy grew by an estimated 4.8% in
2006.

Exports of goods and services in Israel grew by 7% in 2005. Service and agricultural exports
each increased by more than 10% in 2005, whereas exports increased by 5.6% and imports rose
to 4.4%. Tourism revenues increased by 22.7% as a result of the dramatic increase following the
intifada’s subsidence.

Israel’s private consumption increased by 4% in 2005. The largest growth in private consumption
was in the purchase of clothing, footwear, and personal effects, which increased by 10.2%,
following an increase of 5.4% in 2004. Consumption of consumer durables grew much more
slowly than in 2004, with an increase of only 3.4%, compared with 14.3% the previous year.

In the Israeli business sector, business GDP grew by 6.6% in 2005. According to CBS statistics,
the transportation, storage, and communications industries grew by 9.2%, following growth of
6.6% in 2004. The GDP of the wholesale, retail, restaurant, and hotel sector increased by 8.1%,
up from 6.1% in 2004. The GDP of the finance and business services sector in 2005 increased by
6.4%, up from the previous year’s 6.1% growth rate.

The general consensus among economists is that Israel’s economy is very strong and that its
growth potential is in the 4% to 5% range.

The United States is Israel's largest trading partner. In 2005, two-way trade totaled some $26.6
billion, up 12% from 2004. The U.S. trade deficit with Israel was $7.1 billion in 2005, up 33% from
2004, due largely to rising Israeli exports to the U.S. U.S. exports to Israel rose 6.1% in 2005 to
$9.7 billion, making Israel our 19th largest export market for goods. The principal goods exported
from the U.S. include civilian aircraft parts, telecommunications equipment, semiconductors,
civilian aircraft, electrical apparatus, and computer accessories. Israel's chief exports to the U.S.
include diamonds, pharmaceutical preparations, telecommunications equipment, medicinal
equipment, electrical apparatus, and cotton apparel. The two countries signed a free trade
agreement (FTA) in 1985 that progressively eliminated tariffs on most goods traded between the
two countries over the following 10 years. An agricultural trade accord signed in November 1996
addressed the remaining goods not covered in the FTA but has not entirely erased barriers to
trade in the agricultural sector. Israel also has trade and cooperation agreements in place with the
European Union, Canada, Mexico, and other countries.

Best prospect industry sectors in Israel for U.S. exporters are electricity and gas equipment,
defense equipment, medical instruments and disposable products, industrial chemicals,
telecommunication equipment, electronic components, building materials/construction industries
(DIY and infrastructure), safety and security equipment and services, non-prescription drugs,
travel and tourism services, and computer software.

GDP (2006 est.): $170.3 billion.

Annual growth rate (2006): 4.8%.
Per capita GDP (2006): $26,800.
Currency: Shekel (4.13 shekels = 1 U.S. dollar; 2007 est.).
Natural resources: Copper, phosphate, bromide, potash, clay, sand, sulfur, bitumen,
manganese.
Agriculture: Products--citrus and other fruits, vegetables, beef, dairy, and poultry products.
Industry: Types--high-technology projects (including aviation, communications, computer-aided
design and manufactures, medical electronics, fiber optics), wood and paper products, potash
and phosphates, food, beverages, tobacco, caustic soda, cement, construction, plastics, chemical
products, diamond cutting and polishing, metal products, textiles, and footwear.
Trade: Exports (2006 est.)--$42.86 billion. Exports include polished diamonds, electronic
communication, medical and scientific equipment, chemicals and chemical products, electronic
components and computers, machinery and equipment, transport equipment, rubber, plastics,
and textiles. Imports (excluding defense imports, 2006 est.)--$47.8 billion: raw materials,
diamonds, energy ships and airplanes, machinery, equipment, land transportation equipment for
investment, and consumer goods. Major partners--U.S., U.K., Germany; exports--U.S., Belgium,
Hong Kong; imports--U.S., Belgium, Germany, Switzerland, U.K.

1Including Jerusalem
2Israel proclaimed Jerusalem as its capital in 1950. The United States, like nearly all other
countries, maintains its embassy in Tel Aviv.

Australia’s Economy
Australia's economy is dominated by its services sector, yet it is the agricultural and mining
sectors that account for the bulk of Australia's exports. Australia's comparative advantage in the
export of primary products is a reflection of the natural wealth of the Australian continent and its
small domestic market; 21 million people occupy a continent the size of the contiguous United
States. The relative size of the manufacturing sector has been declining for several decades, but
has now steadied at around 10% of GDP. Australia currently enjoys a record high terms-of-trade
well above its long-run average, reflecting the rise in global commodity prices created by booming
demand in China and the drop in prices for imports for manufactured goods, mainly from China.

Since the 1980s, Australia has undertaken significant structural reform of its economy and has
transformed itself from an inward-looking, highly protected, and regulated marketplace to an
open, internationally competitive, export-oriented economy. Key economic reforms included
unilaterally reducing high tariffs and other protective barriers to free trade, floating the Australian
dollar, deregulating the financial services sector, including liberalizing access for foreign banks,
increasing flexibility in the labor market, reducing duplication and increasing efficiency between
the federal and state branches of government, privatizing many government-owned monopolies,
and reforming the taxation system, including introducing a broad-based Goods and Services Tax
(GST) and large reductions in income tax rates.

Australia enjoys a higher standard of living than any G7 country other than the United States.
Australia's economic standing in the world is a result of a commitment to best-practice
macroeconomic policy settings, including the delegation of the conduct of monetary policy to the
independent Reserve Bank of Australia, and a broad acceptance of prudent fiscal policy where
the government aims for fiscal balance over the economic cycle. Largely due to the fall in revenue
as a result of the global economic downturn, net government debt is projected to reach about
A$188 billion (U.S. $150.4 billion) in four years. The previous government, drawing from budget
surpluses, created the “Future Fund” to provide for future liabilities resulting from the retirement of
civil servants. The The Government of Australia is predicting negative 0.5% growth in the 2009-
2010 fiscal year; the International Monetary Fund (IMF) predicted growth to be negative 1.4% for
2009.

Over the last year, unemployment has risen to around 5.5% from 4.2%, and the labor market
participation has remained at around 65%. Both the federal and state governments have
recognized the need to invest heavily in water, transport, ports, telecommunications, and
education infrastructure to expand Australia's supply capacity. The largest river system in
Australia, the Murray-Darling, and related coastal lakes and wetlands in South Australia are
critically threatened and the government has developed a plan to improve irrigation infrastructure
and efficiency and buy back unused water allocations along the river.

A second significant issue is climate change. A report commissioned by then-Prime Minister John
Howard recommended a domestic carbon emissions trading scheme and that Australia take an
active role in developing a future global carbon emissions trading system. Prime Minister Kevin
Rudd plans to introduce a domestic carbon trading system by 2011. It aims to reduce emissions
by 5% from 2000 levels by 2020; the paper includes the possibility of increasing cuts to 15%
should an international commitment to cut emissions be reached.

The Australia-U.S. Free Trade Agreement (AUSFTA) entered into force on January 1, 2005. The
AUSFTA was the first FTA the United States concluded with a developed economy since the
U.S.-Canada FTA in 1988. Australia also has FTAs with New Zealand-ASEAN, Singapore,
Thailand, and Chile, and is pursuing other FTAs, including with China, Japan, Malaysia, and
South Korea. A burgeoning trade relationship marked by ongoing, multi-billion dollar resource
export contracts and rising manufactured imports has driven FTA negotiations with China.

Economy
GDP (2009-2010 estimate): A$1.17 trillion (U.S. $893.6 billion).
Inflation rate (year to March 2009): 2.5% per annum.
Reserve Bank official interest rate (May 2009): 3.00%.
Trade: Exports ($178.9 billion, 2008 estimate)--coal, iron ore, gold, meat, wool, alumina, wheat,
machinery and transport equipment. Major markets--Japan, China, South Korea, U.S. ($10.7
billion), and New Zealand. Imports ($187.2 billion, 2008 estimate)--machinery and transport
equipment, computers and office machines, telecommunication equipment and parts; crude oil
and petroleum products. Major suppliers--China, United States ($23.96 billion), Japan, Singapore,
and Germany.
Exchange rate (2009): U.S. $1 = A$1.25.

United Kingdom’s Economy

The United Kingdom has the fifth-largest economy in the world, is the second-largest economy in
the European Union, and is a major international trading power. A highly developed, diversified,
market-based economy with extensive social welfare services provides most residents with a high
standard of living. Unemployment and inflation levels are amongst the lowest within the European
Union.

The United Kingdom’s economy was hit by turmoil in the financial markets. It entered a recession
in the final quarter of 2008, accompanied by rising unemployment which increased from 5.2% in
January 2008 to 6.5% in January 2009. In response, the British Government implemented a wide-
ranging stability and recovery plan that included a fiscal stimulus package, bank recapitalization,
and credit stimulus schemes.

Since 1979, the British Government has privatized most state-owned companies, including British
Steel, British Airways, British Telecom, British Coal, British Aerospace, and British Gas, although
in some cases the government retains a "golden share" in these companies. The Labour
government has continued the privatization policy of its Conservative predecessor, particularly by
encouraging "public-private partnerships" (partial privatization) in such areas as the London
Underground. The economy of the United Kingdom is now primarily based on private enterprise,
accounting for approximately four-fifths of employment and output.

London remains a leading international financial center, but has been affected by recent financial
market turbulence. London banks have laid off workers and many have scaled back their
international operations. Two U.K. banks, Northern Rock and Bradford & Bingley, have been
nationalized while the British Government has taken a significant share in two others. London’s
financial exports contribute greatly to the United Kingdom’s gross domestic product, but its
contribution is expected to be considerably lessened in the next few years. London is a global
leader in emissions trading and is home to the Alternative Investment Market (AIM). It is also a
government priority to make London the leading center of Islamic finance.
The United Kingdom is the European Union's only significant energy exporter. It is also one of the
world's largest energy consumers, and most analysts predict a shift in U.K. status from net
exporter to net importer of energy by 2020, possibly sooner. Oil production in the U.K. is leveling
off. While North Sea natural gas production continues to rise, gains may be offset by ever-
increasing consumption. North Sea oil and gas exploration activities are shifting to smaller fields
and to increments of larger, developed fields, presenting opportunities for smaller, independent
energy operators to become active in North Sea production.

GDP (at current market prices, 2008 est.): $1.824 trillion.

Annual growth rate (2008 est.): 0.7%.
Per capita GDP (2008 est.): $31,400.
Natural resources: Coal, oil, natural gas, tin, limestone, iron ore, salt, clay, chalk, gypsum, lead,
silica.
Agriculture (1% of GDP): Products--cereals, oilseed, potatoes, vegetables, cattle, sheep,
poultry, fish.
Industry: Types--steel, heavy engineering and metal manufacturing, textiles, motor vehicles and
aircraft, construction (6% of GDP), electronics, chemicals.

Services (75% of GDP): Types--financial, business, distribution, transport, communication,

hotels.
Trade (2008 est.): Exports of goods and services--$458.8 billion: manufactured goods, fuels,
chemicals; food, beverages, tobacco. Major markets--U.S., European Union. Imports of goods
and services--$630.7 billion: manufactured goods, machinery, fuels, foodstuffs. Major suppliers--
U.S., European Union, Japan, and China.

South Korea’s Economy