In the evolving global landscape, the importance of strategic industries extends far beyond mere industrial competitiveness. Instead, these industries are increasingly seen through the lens of national security and sustainable development. This shift is particularly relevant for Taiwan, where the intersection of economic stability and geopolitical tensions requires a nuanced and forward-looking approach to industrial policy.
Tristan Liu, in his article “The Development and Impact of Global Strategic Industry Issues,” identifies four major trends shaping the future of strategic industries. Firstly, industries that were previously overlooked are now gaining strategic significance. These sectors, which may have been considered peripheral in the past, are now critical to national security and require greater attention and resources. Secondly, industries are becoming strategic through the dynamics of oligopolistic competition. As authoritarian regimes seek to dominate global markets, industries that can withstand and counter these monopolistic efforts are becoming increasingly vital. Thirdly, emerging technologies ranging from artificial intelligence to advanced data analytics are gaining strategic importance, particularly when they meet certain conditions that can significantly disrupt existing markets or enhance national security. Lastly, industries that benefit from network effects and have high barriers to entry are becoming strategically valuable. These industries, such as telecommunications and digital services, can create substantial influence in global markets.
Given these trends, Liu emphasizes the need for Taiwan to prioritize the third trend—emerging technologies that could pose fatal threats if not adequately addressed. He suggests investing in research and development to create countermeasures against potentially critical technologies that could be exploited by adversaries. Following this, Taiwan should focus on the first trend—non-mainstream sectors that are often overlooked but hold significant strategic potential. By establishing robust security monitoring mechanisms across various industries, Taiwan can better anticipate and mitigate potential threats. Taiwan should then consider the second and fourth trends to work with democratic allies to counter monopolistic attempts by authoritarian countries. Liu advocates for a thorough analysis of global market structures for key materials and equipment, ensuring Taiwan maintains a competitive edge in these crucial areas, and actively exporting integrated system solutions to build international influence.
The financial dimension of strategic industry development is also important. Liu mentions that as global M&A and venture capital shift more towards non-democratic regions such as Singapore and the Middle East, Taiwan must engage in financial strategies that protect its interests. Monitoring capital markets and ensuring transparency in financial transactions are essential to maintaining economic stability and security. Besides the financial aspects, Liu highlights the governance challenges in balancing public interests, human rights, and property rights in this complex new era. He stresses the importance of communication and leadership in enabling effective public-private cooperation. In this new landscape, where economic policy and national security are deeply intertwined, the role of government is crucial in guiding the nation through these challenges.
As Taiwan navigates the complexities of the global economy, its approach to strategic industries must evolve to prioritize national security and sustainable development. By focusing on emerging technologies, overlooked sectors, and international collaboration, Liu believes that Taiwan can position itself to respond effectively to the challenges posed by authoritarian regimes and maintain its competitive edge.
This article is based on Tristan Liu’s report “The Development and Impact of Global Strategic Industry Issues.” Read the full report.