The Taiwan Exception: Implications for Contending Political Economy Paradigms

Abstract

This article examines the rapid economic growth that has occurred in the Republic of China on Taiwan over the past 35 years and argues that it constitutes a significant deviation from the postulates of the two major contending paradigms for studying international political economy: dependency theory and developmentalist theory. Substantively, while the ROC case demonstrates that “growth with equity” is possible in an externally oriented, market-based economy, it also suggests that the eradication of colonial institutions, effective land reform, government-directed structural transformation, national management and regulation of foreign multinational corporations (MNCs), and a fairly equalitarian distribution of wealth all play a central role in stimulating development. Theoretically, the Taiwan “exception” implies that the dependency approach is correct in focusing on structural conditions in the domestic and international political economy. However, rather than forming a holistic and unalterable syndrome as dependency theory assumes, these factors are variables, not constants, since Taiwan's economic growth and transformation resulted from the ROC's deviation from normal dependency conditions.