Taiwan's Economic Development and its Relationship to the International Environment

Abstract

T he purpose of this article is to analyze the relationship between Taiwan's economic development over the last forty years and the international environment of the same period. The theme is entirely appropriate because Taiwan's economic success has been closely related to its interactions with the outside world, in terms of international trade, investment, and technological transfers. The essential characteristics of the international environment and its relationship to Taiwan can only be understood within a long-term historical context. The postwar economic development of many contemporary less-developed countries (LDCs), including Taiwan, has been a process of transitional growth characterized by a termination of prewar agrarian colonialism and an initiation of what Simon Kuznets calls the of modern economic growth (MEG).''1 This modern epoch was a new way of life brought to Western societies two hundred years ago with the industrial revolution. During this period, the primary growth force was the result of the systematic exploration of science and technology and their application to the art of production. The motivation behind the transitional growth process of the LDCs over the last forty years has been a drive to imitate the economic lifestyle of the Western world in the epoch of MEG. From among over one hundred contemporary LDCs, Taiwan has had success in this process that is visible from its entry, since 1980, into a new stage of development generally defined as a technologically and externally oriented phase. The appearance of this new phase indicates the end of the earlier one of transitional growth. As a result, Taiwan