The origin of industrialization on the island and the changes in the relationship between the different regimes and the society, both before and after the wars, were interesting in themselves in explaining Taiwan's economic development. Among these, the high degree of
"flexibility" in developing these political, social, economic and legal mechanisms plays the
key part in Taiwan's national development.
(i) The N eed o f Re-building o f the Central Administration
During the Japanese colonial period, 1895-1945, the foundations were laid for Taiwan's rapid economic growth and the relatively smooth structural change of its post-war economy [cf. S.F. Lee (1991): 191-198].4* It was also during this period that social, political and economic conditions [Gold (1986): 32-46; S.F. Lee (1991)] were created by means of
This popular support for the KMT (Nationalists) has been gradually declining, especially in the past three yean. It is worth mentioning that in the December 1986 elections, the fledgling opposition party, the Democratic Progress Party (DPP), did secure almost one quarter of the votes cast, with a significant improvement on the 'tangwais' (literally 'those outside the KMT Party*) showing in the last elections in 1983. See FT.L (London), 15 June, 1988, Taiwan wrestles with reform of democracy'; also, Tne
Economist (London), 5-11 Mar., 1988, 'A Survey of Taiwan'. |
L Reynolds has asserted, thst the Japanese colonial policies were much more development-oriented compared with those of other colonial powers; L. Reynolds, The Spread of Economic Growth of the Third World. 1850-1980', (1983)//. o f Economic Literature, 21(3), pp. 941-80.
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which Taiwan was able to pursue an outward-oriented strategy of development in the 1960s and 1970s [S.F. Lee (1991): 187-198; also, Li (1976): Chapter 2, pp. 12-19; Li (1990): 3], In short, Japan created the basic mechanism [cf. Gold (1986), pp. 43-46] by which the Nationalist government was able to take over and manage effectively the agricultural development of Taiwan. The rise in productivity during this period also provided a source of wealth which could be utilized by the government in its drive to Taiwan's post-war industrialization. On the other hand, the Nationalist government took over the then existing rural infrastructure and an initial industrial base, but later introduced changes and refinements to make the system respond to "Taiwan's own needs" more than, of course, Japan's.
Since 1949, when the Nationalist central government was defeated in China's civil war and moved itself to Taiwan, the ROC has been engaged in a continuous struggle for survival. Internally, it faces potential resistance from the Taiwanese islanders (80-85% of the total population43) whose ancestors migrated from the Mainland to Taiwan about four hundred years ago, and a potential military threat from the mainland Communists as well. Externally, besides a constant challenge by the Communist regime to its legitimacy, the ROC has faced a serious crisis of "international de-recognition",44 particularly after October 1971, when the ROC was expelled from the United Nations, of which it was an original member, and replaced by the PRC. Subsequently, the ROC (Taiwan) has also lost its seat in international organizations such as the International Monetary Fund and the World Bank. One notable exception is the Asian Development Bank, where Taiwan (the ROC) and China (the PRC) are both members.45
43 More thin 1.5 million people under General Chiann K'ni-Shek lied in the two Venn period that culminated in the foundation of the Communist People's Republic in the autumn of 1949. Then they joined sn existing population of about 6 million Taiwanese. Cf. The Economist (London). (5-11 March. 1988): "A Survey o f Taiwao"; see also Gold (19ft6): 54-55.
44 Toward the end of July 1991, the ROC only maintained full diplomatic relations with about twenty-nine countries, most of them small and uninfluential. except South Africa and South Korea. Cf. Asiaweek (Ya-Zhou Zhou Kan). (28/July/91): 25. Moreover, none of those countries can be guaranteed never to switch.
Up to 1988, according to the Nationalista, the ROC still maintains its seat in only ten inter-governmental organizations. See Chinese I Yearbook o f International Law and Affairs (Tat wan), Vol.6 (1986/87), Taipei, j>. 322. As to the case of the Asian Development Bank. Taiwan had. since China's accession, boycotted meeting until March 1988, when the government (President Teng-Hui Lee) announced ita decision to send representatives to participate in the 1988 Annual Meeting in late April. See 'Official Transcript o f the Press Conference o f President Lee on 22 Feb., 1988', Government Information Office, Taipei.
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In sum, the efficiency of a military-economic running authority is the first task for the Nationalists after the civil war. Despite its shortage of diplomatic partners, Taiwan is by no means restricted in its economic dealings. On the contrary, the diplomatic setbacks prompted the initiation of a "self-reliance" campaign, in which both the government and the private sector joined in a concerted effort to promote strength and stability through economic development and progress.
(ii) importance o f Informal Regulation
The operation of the economic strategy indicates that the ROC's foreign policy has been transformed under the notion of "economic development first",46 this provides a parallel contrast to China's strategy since 1976. As a foreign policy instrument, Nationalist China's economic strategy has two main types of objective: 'political objectives'47 and 'economic ob jectives'48.
Also, benefited from this economic strategy for survival, the importance o f informal regulation and norms have greatly increased. Internally, this economic strategy was to build Taiwan up as 'a model province of China'49 based on Sun Yat-sen's The Principle o f Livelihood [Cf. Section II.2.A], and externally, to reach the status of a developed country. It is only through the understanding of these objectives that one can explain why a military and authoritarian regime had to make long term compromises with the unarmed population, given the fact that strength of the GMD regime vis-a-vis its own society contrasted greatly with its
46 This economic strategy was not an entirely new device introduced after the UN debacle already mentioned; however it was only as a result of the de-recognition crisis that the lull ran^e of this strategy was envisaged. On the contrary, it can be traced back to the 1960s when Taiwan, with its increased economic capability, began to launch its 'Overseas Development Assistance' programme, directed at the less-developed world. However, the economic strategy of the 1970s envisaged exchanges, not only with the less-developed countries but also with the 'developed' ones, having the clear purpose of achieving a dynamic flow of trade inter-dependence. i
47 The political objectives of the economic strategy are at leaat four in number after 1949: how to safeguard the survival of the ROC as well as of the mainland emigrants on Taiwan; and how to safeguard the physical existence of Taiwan island as an independent entity free from outside (especially Communist Chinese) influence are two mam objectives for the Nationalists. Then, bow to preserve the traditional Chinese way of life, namely, the continuation of Chinese culture and history, and the standard of living that had been built up in Taiwan is the ideological issue. Finally, to promote the possibility of any future political contacts (official ties) between Taiwan and its trade partners, through the existing (unofficial) trade relations. Obviously, the last objective is a mixture of political and economic goals.
48 Closely intertwined with these political aims, the economic objectives of the isolated island were: to promote Taiwan's economic strength, stability and growth, and to upgrade its industrial structure, snd to reach economic self-sufficiency, by attracting foreign investment and technology in more sophisticated industries.
However, the movement of Tsiwan's Independence' from China has been seriously prohibited by the Nationalist government since 1940s. Cf. Art. 2 of the 1987 National Security Law.
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weakness and dependency in the international sphere; and why the flexibility of development policy and efficiency of its bureaucracy are necessary.