I would think fear of being blown up by mainland China at any moment is bad for capital investment... meanwhile you have a highly skilled and educated workforce vying to man the capital in the country. I would think that would make labor artificially weak.
IMO Taiwan needs world recognition and solid assurances their capital investments won't end up in the opium pipe of some CCP party man.
Taiwan's numbers looks good on paper (until you dig further), but the reality on the pavement, or lackthereof, is dire. The noise, air, visual pollution are as bad as it was from 30 years ago, maybe worse. Traffic is bad, and salary to cost of living is extreme.
Japan's numbers look bad. But its quality of life is one of the best in the world.
Has there been progress in infrastructure/housing in Taiwan? Sure, in small areas, such as new housing developments, where all the capital sits, extracting rent or sitting empty, contributing nothing.
We need to do better, raise our standards. Otherwise we're going to get left behind even further.