Economic Security has gained significant attention in recent years, becoming a central topic of discussion on the global stage. For the past half-century, with the advancement of globalization, free trade and the development of global supply chains have been regarded as dominant trends. In pursuit of economic growth, countries have competed to expand their global footprint, relocating industries to lower-cost regions.
However, as the international situation evolves, the link between economics and politics has become more evident. The idea that economic relations could remain separate from political issues and support a universal free trade system is being challenged. As a result, economic security has become a priority for major economies like the United States, the European Union, and Japan.
This surge in interest was particularly sparked by the 2018 U.S.-China trade tensions and Japan's introduction of the Economic Security Promotion Law in 2022, which established a dedicated ministerial post to address these concerns. Economic security is now regarded as just as important as traditional military defense, with both being seen as inseparable aspects of national security. The COVID-19 pandemic further emphasized the importance of economic security by disrupting global supply chains, and the increasing use of economic coercion by authoritarian states like China has made it clear that economic security is crucial.
The Dual Nature of Economic Security: Self-Sufficiency and Global Competitiveness
Economic security can be understood in two main ways. The first involves ensuring that a nation can sustain itself economically, maintaining a standard of living without relying too heavily on other countries. This includes securing access to essential resources like energy and food, as well as ensuring the availability of medical supplies during pandemics. The second aspect involves maintaining a nation's importance in the global industrial landscape, particularly in strategic sectors like military and high-tech industries. This helps ensure that a nation can continue to develop and protect its security in these critical areas.
Taiwan's Semiconductor Industry: A Strategic Asset
However, this focus on economic security raises an important question: Could pursuing these goals lead to fundamental conflicts between national interests? Taiwan’s semiconductor industry is a prime example of where these concerns intersect. In today's tech-driven world, semiconductors are essential components of everyday devices like smartphones, computers, and cars. The COVID-19 pandemic led to semiconductor supply shortages, which in turn affected global industries, including a significant reduction in car production due to a lack of chips.
Beyond consumer electronics, semiconductors are also critical in emerging technologies and addressing global challenges such as artificial intelligence, satellite communications, and climate change solutions. Countries like the United States, South Korea, and Taiwan recognize the semiconductor supply chain as a strategic asset. Many governments are now working to diversify semiconductor production, encouraging companies like TSMC to establish plants within their borders. This would help build a more complete and advanced industrial chain, ensuring that critical technologies are produced domestically.
For Taiwan, this trend in technology diplomacy presents an opportunity to strengthen relationships with democratic nations and enhance its global diplomatic ties. However, there are also concerns about whether this geopolitical restructuring of global supply chains might weaken Taiwan’s economic prosperity and national security, given the vital role the semiconductor industry plays in Taiwan’s economy—a phenomenon often referred to as Taiwan’s "silicon shield."
Global Industry Restructuring and Geopolitical Risks
This discussion is not limited to semiconductors alone; other key industries could face similar risks as foreign nations, driven by economic security concerns, attempt to attract these industries to their own countries. Taiwan, in particular, is often viewed as geopolitically risky. In 2021, The Economist highlighted Taiwan as "the most dangerous place on Earth," pointing to increasing U.S.-China tensions and changes within China’s domestic political and economic landscape that could heighten the risk of invasion. These concerns have led to a push to reduce global dependence on Taiwan’s semiconductor industry by diversifying production to other regions.
While these concerns are not without merit, it’s important to consider the economic benefits of maintaining a global division of labor within supply chains. On the other hand, for Taiwan, preserving its advantage and market share in the semiconductor industry is crucial to its economic security strategy.
The Democratic Supply Chain: A Collaborative Approach
"Democratic supply chain", which was addressed by President Lai Ching-te in his recent inaugural ceremony, could be a solution to the inconsistencies in economic security policies among nations and preserving a free and open international trade market.
A democratic supply chain is based on the idea that democratic nations should work together to create reliable and trustworthy supply chains that align with shared values and principles. By collaborating with other democracies, countries like Taiwan can strengthen their economic resilience and collectively deter military aggression from authoritarian regimes. With this concept, it is possible to meet the economic security needs of these nations while also upholding the principles of free and open international trade.
The Role of the Younger Generation
In this effort, young people can play a significant role. Promoting a democratic supply chain goes beyond just economic and policy considerations; it requires identifying partners who share similar values and can be trusted. In democratic countries, these decisions are not made solely by a few policymakers but are shaped by public opinion and civic engagement. Young people, with their strong communication skills and passion for activism, can contribute significantly by participating in public affairs, advocating for democracy and freedom, and using social media to showcase their country’s commitment to universal values. These efforts are crucial in promoting the idea of a democratic supply chain.
Additionally, the resilience of domestic industries and society as a whole—meaning the ability to respond to social, economic, and natural disaster impacts—is also a key factor in determining whether a country is seen as trustworthy by other nations. This resilience is not just about enhancing physical infrastructure; it also involves fostering community awareness, encouraging democratic participation, promoting social openness, and improving media literacy. From this perspective, promoting information transparency, enhancing media literacy, and improving the ability to counter misinformation are among the essential efforts that can help a country become part of a reliable international supply chain.
Forging a Brighter Future: Building a Resilient and Democratic Global Economy
While economic security is necessary in today’s globalized world, there is a risk that pursuing such security could lead to a retreat from globalization and a rise in protectionism. The concept of a democratic supply chain offers a viable solution to this dilemma. By cooperating with like-minded nations and establishing trustworthy transnational supply chains, countries can meet their economic security needs while also promoting global free trade and democratic development.
However, implementing a democratic supply chain is not without its challenges. It requires coordinated efforts from governments, businesses, and civil society. As the future of society, young people can contribute to creating a safer, more prosperous, and freer future through their involvement in public affairs, support for democratic policies, and promotion of international exchanges. Most importantly, it is crucial to recognize that in a time when global democracy is under threat, values such as democracy, freedom, the rule of law, and human rights are not just ideals or principles; they are also critical conditions for industrial and economic development.
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About the Author
Kuo Ruei is an Associate Researcher at the Department of International Affairs of the Democratic Progressive Party. With a background in Japanese studies, his main portfolios and interests are Japan-Taiwan relations and broader Asian affairs. Prior to his current role, he served as a legislative aide to Legislator Loh,Meei-Ling from 2020 to 2024, focusing on immigrant rights, related legislation, and electoral systems. Kuo holds a Bachelor of Economics degree from Kyoto University.
Kuo can be reached at the DPP’s Department of International Affairs' Email: [email protected]