Back Issues 11-20

THE HIDDEN COST OF KEEPING OUTDATED INDUSTRIES: LOWER FERTILITY AND SLOWER ECONOMIC GROWTH

You-Syun Huang

Department of Finance, Tainan University of Technology, Tainan

 Yi-Chou Wang

Department of International Business Management, Tainan University of Technology, Tainan; This email address is being protected from spambots. You need JavaScript enabled to view it.

Hao-Te Lu^*

Department of Finance, Tainan University of Technology, Tainan

*Correspondence: This email address is being protected from spambots. You need JavaScript enabled to view it.

Abstract

In an attempt to prevent obsolete industries from relocating to other countries, governments have implemented various policies, including exchange rate depreciation, lowered interest rates, and export subsidies. This study reveals a negative correlation between the dependency ratio and economic growth, which initially increases and then declines. The garment industry serves as the empirical subject of this research.

The study further illustrates that the Four Asian Tigers are grappling with the same issue as Japan. Retaining policies in outdated industries by governments can lead to an initial surge in domestic economies, followed by a downturn. Hence, when governments resort to shortsighted policies, similar to those adopted by Japan, South Korea, and Taiwan, their economies experience a cycle of initial growth and subsequent decline.

Keywords: Factor Movements, FDI, Policy Making, Birthrate, Demographics, GDP.