Japan is simultaneously pledging more than 370 trillion yen to strengthen its economy over the next 15 years and watching corporate IPOs fall to their lowest level in a decade and a half — a contradiction that carries an urgent message for Taiwan.
Abundant Savings Cannot Substitute for Patient Capital
The gap is not about money. Japanese households hold more than 2,000 trillion yen in financial assets, and corporations have accumulated vast cash reserves. What Japan lacks — and what its slowing IPO pipeline exposes — is "patient capital": investors willing to absorb the long timelines and high uncertainty that genuine innovation demands.
Financial abundance and productive capital deployment are not the same thing, and conflating them is how mature economies begin to stagnate. The lesson travels directly to Taiwan. The island's benchmark stock index has repeatedly hit record highs in recent years, but a buoyant market is a lagging indicator of competitiveness, not a leading one.
The companies driving those record closes are largely the product of decades of sustained prior investment. The question Taiwan should be asking is what is being seeded today that will define the next 20 years.
The Growth Chain America Built and Taiwan Is Still Missing
The United States did not produce a continuous stream of world-class companies because it had a large stock market. It did so because it built a complete capital relay chain — from angel investment and venture capital through growth funds and private equity, all the way to IPO and strategic M&A. At each stage, capital is available in the right form and at the right risk tolerance, allowing companies to spend decades maturing before they ever face public market scrutiny.
Taiwan's semiconductor industry offers a parallel lesson closer to home. TSMC and the broader chipmaking ecosystem did not emerge from market forces alone. They were the product of roughly 50 years of coordinated investment by the government, research institutions such as the Industrial Technology Research Institute (ITRI), and private enterprise.
Without sustained talent development, continuous R&D funding, and deliberate policy support, Taiwan would have no globally dominant semiconductor industry today. That experience is replicable — but only with the same long-term discipline. Artificial intelligence, biotechnology, robotics, space technology, and precision manufacturing all require the same patient, long-horizon investment to produce results.
Five Levers to Rebuild Taiwan's Startup and Innovation Ecosystem
Du Zichen, an adjunct professor at Tunghai University's College of Management, argues that the next phase of reform should not target the stock market itself but the institutional environment that determines whether companies can grow at all.
He outlines five concrete directions. First, Taiwan should adopt a version of Japan's "second-chance" mechanism — reducing the bankruptcy stigma and debt burden that follow failed ventures, so that the broader economy becomes more tolerant of entrepreneurial risk. Second, drawing on the U.S. model, a portion of public contracts could be restructured as first orders for small startups, providing early market validation that private investors alone rarely supply.
Third, cross-sector regulatory barriers that prevent talent from moving freely between academia, industry, and research institutions should be eased to accelerate commercialization of scientific work. Fourth, Taiwan's scattered innovation clusters and industrial corridors should be more deliberately integrated rather than allowed to fragment and duplicate effort. Fifth, state-owned enterprise resources could be pooled into a cross-term sovereign wealth fund — structured to outlast any single political cycle — for sustained investment in deep tech and hard tech.
Beyond these structural moves, Du argues that policymakers should reform venture capital, M&A, and listing frameworks to draw in long-term institutional capital such as pension funds and insurance assets. Corporations, for their part, should actively build corporate venture arms and pursue second growth curves through strategic investment and international expansion rather than optimizing purely for near-term returns.
Patient Capital or Perpetual Dependence on Past Glories
The deeper concern Du raises is one of measurement. When policymakers and financial analysts evaluate economic health primarily through trading volume and market capitalization, they are reading the output of decisions made 20 or 30 years ago — not the quality of the decisions being made now.
A country's true competitiveness lies not in how well its established giants perform, but in how consistently it incubates the next generation of global industry leaders. Taiwan's semiconductor dominance is a source of justified pride — but pride in a past achievement is not a strategy for the future.
The laboratories, incubators, and startup parks that exist today — many chronically underfunded by capital that lacks the patience for long gestation periods — are where the next defining industry will either emerge or fail to. Without the institutional relay chain to carry companies through their most vulnerable years, today's record-high stock index becomes what Du calls a rootless prosperity: impressive on the surface, unsustainable beneath it.
*The author is an adjunct professor at the College of Management, Tunghai University. （Related： When South Korea Looks at Taiwan and Sees a Warning ｜ Latest ）
