The aim of the thesis i.s to study the prospects for Taipei's development as an International Financial Centre (IFC) in the Asia-Pacific region.
It first develops a general theoretical framework, which includes location theory, major determinants and definition of IFCs. It also studies the historical evolution of world primary IFCs and major IFCs in the Asia-Pacific region. On the basis of the theoretical study, it examines financial development in Taiwan in depth and conducts two empirical analyses to compare its strengths and weaknesses with other countries in the region. One of the empirical studies is based on historical financial data and applies two statistical techniques: hierarchical cluster analysis and principal components analysis. The other is a questionnaire survey to ascertain perceptions of financial expertise in Asia and London. The responses are analysed by employing an analytic hierarchy process.
The thesis then identifies Singapore as a useful model for Taipei to follow. It also identifies specialisation and regionalisation as the main attributes of Singapore's success. It further analyses the costs and benefits of becoming an IFe. A macroeconomic model is then formulated, to examine the impact of international capital movements on the domestic macroeconomy, which is unexplored by previous studies. The estimation of this model confirms how important it is for financial and foreign exchange rate policies to address the stability of the foreign exchange rate and the competitiveness of exporting industries. Various scenario simulations indicate that the economic costs for Taipei becoming an IFC are higher than the benefits. Finally, based on the above studies, the thesis concludes that Taipei's development as a significant IFC is unlikely. However, with its economic strength, it can still become an important regional force.
