Taiwan’s AI New Ten Major Projects White Paper: A Smart Nation Strategy Centered on Innovation-Driven Growth Theory

 Taiwan’s AI New Ten Major Projects White Paper: A Smart Nation Strategy Centered on Innovation-Driven Growth Theory

(Based on the Innovation-Driven Growth Framework of Mokyr–Aghion–Howitt)

The 2025 Nobel Prize in Economics was awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their groundbreaking contributions to the theory of "innovation-driven economic growth."

Their research focuses on how innovation fuels long-term economic growth, elucidated from distinct perspectives:

  • Joel Mokyr, an economic historian at Northwestern University, received half the prize for demonstrating that technological progress drives productivity growth, contingent on societal institutions fostering knowledge exchange and experimentation.
  • Philippe Aghion (France) and Peter Howitt (Canada) shared the other half for their 1992 "Aghion–Howitt model," which formalized the theory of creative destruction, illustrating how innovation drives economic growth by replacing outdated technologies with new ones.

Abstract

This white paper leverages the "innovation-driven growth theory" of 2025 Nobel laureates Joel Mokyr, Philippe Aghion, and Peter Howitt as its theoretical foundation. It analyzes the institutional, technological, and economic dynamics of Taiwan’s AI New Ten Major Projects and proposes a smart nation growth framework integrating innovation culture, institutional trust, and AI infrastructure.

The report posits that AI development is not merely a technological investment but an engine for institutional innovation. By incorporating the Aghion–Howitt endogenous growth model and Mokyr’s theory of knowledge culture, this white paper establishes a triadic model of “AI × Institutions × Growth” as the core basis for policy design.

The ultimate goal is to transform Taiwan from a hardware-export economy into an innovation-driven civilizational economy, establishing its institutional advantages and ethical leadership in the global AI revolution.


I. Introduction: From the Industrial Revolution to the AI Revolution

The 2025 Nobel Prize in Economics, awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt, recognizes their pioneering contributions to innovation-driven growth theory. Their work reveals that the interplay of technological innovation, institutional design, and knowledge evolution forms the fundamental engine of long-term economic growth.

Taiwan’s AI New Ten Major Projects represent a historic opportunity to transition from a hardware-centric island to a smart nation. This white paper uses the trio’s theoretical framework to analyze how AI infrastructure can be transformed into sustained innovation-driven growth and proposes a policy roadmap.


II. Theoretical Foundation: Three Pillars of Innovation-Driven Growth

PillarScholarly ContributionPolicy Implication
Institutional Knowledge CultureJoel Mokyr: Social accumulation of knowledge relies on cultural and trust structuresBuild open data and research trust networks, strengthen AI ethics, and foster cross-disciplinary collaboration
Creative DestructionAghion–Howitt Model: Innovation drives the replacement of old technologiesEncourage "innovative replacement" rather than protecting outdated industries
Endogenous GrowthTechnological progress stems from knowledge diffusion within firms and research institutionsAI infrastructure should integrate academia, industry, and public data ecosystems

III. AI New Ten Major Projects Framework (Integration of Policy and Theory)

AI New Ten Major ProjectsCorresponding Theoretical FunctionExpected Growth Mechanism
1️⃣ AI Supercomputing CenterKnowledge accumulation hub (Mokyr’s knowledge co-creation)Enhance marginal returns on national innovation
2️⃣ Smart Manufacturing UpgradeCreative destruction (Aghion–Howitt)Replace outdated production lines with AI-driven processes, boosting total factor productivity
3️⃣ Smart TransportationInstitutional innovation testing groundTest AI regulations and data-sharing frameworks
4️⃣ Smart HealthcarePublic data trust systemEstablish high-ethical-standard data governance frameworks
5️⃣ AI Education and Talent DevelopmentEndogenous diffusion of human capitalStrengthen AI graduate programs, technical faculty, and interdisciplinary training
6️⃣ Smart EnergyAI algorithms optimizing energy dispatchDevelop a "green innovation-driven growth model"
7️⃣ AI Semiconductor ManufacturingAI as the engine of foundational industry innovationDrive a virtuous cycle of chip-enabled knowledge and AI advancement
8️⃣ Smart AgricultureLocalized innovation ecosystemIntegrate AI into SMEs and rural areas, enhancing inclusive innovation
9️⃣ AI Governance and Legal SandboxInstitutional experimentation platformBalance innovation and risk, mitigating technological externalities
🔟 Open Data and National AI CloudKnowledge market infrastructureEstablish a "data public good" mechanism to promote enterprise innovation spillovers

IV. Model Illustration: The Growth Equation for AI-Driven Innovation

Based on the Aghion–Howitt endogenous growth framework, the simplified model is:

Y = A(K, L, I)

Where:

  • A (technological knowledge) is enhanced by AI innovation and institutional trust
  • I represents innovation investment
  • dA/dt = λ·I – δA, where the rate of technological progress depends on the balance between the innovation accumulation rate (λ) and knowledge depreciation rate (δ)

Applied to the AI New Ten Major Projects:

  • λ corresponds to policy implementation efficiency (e.g., speed of open data adoption)
  • I stems from government and corporate investment in AI infrastructure
  • δ can be reduced through institutional innovation and talent re-skilling

V. Policy Recommendations: An AI National Strategy Guided by Innovation Dynamics

(1) Institutional Innovation

  • Establish an AI Innovation Sandbox Law to enable cross-ministerial AI application trials, fostering creative destruction.
  • Create a Public Data Trust Fund to treat data as a public good for AI model training.

(2) Research and Talent Development

  • Launch an AI+X Doctoral Program to cultivate interdisciplinary research talent (engineering, social sciences, ethics).
  • Co-build AI Co-Innovation Labs with enterprises, leveraging Aghion’s endogenous growth mechanism to enhance innovation momentum.

(3) Industry and Regional Development

  • Plan an AI Industry Corridor based on the concept of "innovation diffusion waves," extending from northern AI cloud centers to central and southern application hubs.
  • Establish a Local AI Application Fund to support innovation in agriculture, healthcare, and environmental sectors.

(4) International and Strategic Dimensions

  • Form an AI Open Research Agreement with the EU and Japan to create a Mokyr-style cross-cultural knowledge co-creation platform.
  • Develop a Green AI Technology Export Model, positioning AI as Taiwan’s new knowledge-based export asset.

VI. Conclusion: From Innovation Theory to an Innovation Civilization

The theories of Mokyr, Aghion, and Howitt reveal:

"Economic growth is not an automatic process but a result of civilizational choices."

Taiwan stands at a critical juncture in the AI revolution.

By transforming the AI New Ten Major Projects into an institutional platform for an innovation ecosystem, Taiwan can not only sustain growth but also establish itself as a global leader in the AI civilization race, embodying both innovation and ethical excellence.

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