An Estimation of Taiwan's Direct Investment in Mainland China and Its Effect on Both Sides' Export Performance Toward the US Market: The Example of Taiwan's Apparel Industry

It this paper we have imputed the possible outward investment patterns toward mainland China for Taiwan's apparel industry during the period from 1983 to 1991. An empirical model is then established to explicitly examine its possible impact on Taiwan apparel industry's export. This study found that outward investment by Taiwan's apparel industry in mainland China will adversely affect the Taiwanese apparel industry's own export competitiveness. In addition, the growing outward investment of Taiwan's apparel industry in mainland China is an important factor in encouraging the indirect trading activities across the Taiwan Strait.