The island of Taiwan or Formosa (name given by the Portuguese) is located in a volcanic archipelago. The forested mountains extend from north to south in the central part of the island. In the western portion, the narrow coastal plain is occupied by rice, tea, sugar cane, bananas and tobacco.
Its climate is quite humid and hot (it is cut to the south by the Tropic of Cancer), which explains the predominance of tropical cultures. Camphor is extracted from the forests.
The population is 22 million inhabitants and has a high demographic density (610 inhab./km2). The majority of the population is of Chinese origin, practices Buddhism (50.9%) and has excellent social indicators.
Formosa was an integral part of China until the end of the Chinese Revolution and the victory of Mao Zedong over Chiang Kai-chek, who, defeated, fled with members of the Kuomintang Party to Taiwan, founding the Nationalist Republic of China – capitalist and ally from the USA. The country began to receive important waves of migrants from mainland China, even the economic and intellectual elite.
The remarkable industrialization campaign began in the 1960s, when World Bank and US technocrats, collaborating with the Kuomintang government, began to apply an export-oriented development strategy.
Taiwan’s development factors
Taiwanese growth was largely achieved with productivity and competitiveness, generated by a flexible production system.
In Taiwan, there are two crucial characteristics for understanding the process:
- the Kuomintang State (KMT) occupied the center of the structure;
- the structure is a network formed by relations between companies, between companies and the State and between companies and the world market through trading companies (mainly Japanese) and commercial intermediaries from all over the world.
During the 1950s, agricultural productivity was the first source of surplus accumulation. It generated investment capital and freed up labor for work in the urban industrial sector.
In 1960, the 19-item “ Economic and Financial Reform Program ” released trade controls, stimulated exports and devised a strategy to attract foreign investment. Taiwan was the first country to create an Export Processing Zone in Kaoshiung.
Medium-sized Japanese companies soon moved in to benefit from low wages, an absence of environmental controls, educated labor and government support. However, the core of the Taiwanese industrial structure was the country itself. It consisted of a large number of small and medium-sized companies, founded with family savings and cooperative savings networks (the famous huis) and helped, when necessary, with credits from public banks.
But most of Taiwan’s development was made possible by a flexible combination of decentralized networks of Taiwanese family businesses, acting as subcontractors to foreign manufacturers located in Taiwan and as suppliers of international commercial networks, usually connected by intermediaries. That is how the Made in Taiwan product entered the whole sphere of our daily life.
A crucial factor in increasing economic productivity was the high income of the labor force through a combination of low wages, decent education, hard work and social peace.
From the mid-1970s onwards, the State of Kuomintang committed itself to a process of improvement and modernization of the industry, especially in the high-tech sectors. This effort included the launch of the personal computer, the computer peripherals industry and Taiwanese microelectronics, as well as the construction of one of Asia’s most successful technology parks: Hsinchu, near Taipei.
Other industrial sectors, such as clothing (textiles), were advised by the government to improve the quality and value of their products to circumvent import restriction quotas in foreign markets, usually calculated by volume.
According to recipesinthebox, Taiwan is the largest exporter of shoes in the world today, but a large part of the production of its companies, in fact, occurs in China.
Taiwan grew at an extraordinary 8.6% annual rate (between 1953 and 1985) and achieved a high level of development in the production of plastics, chemicals, shipbuilding, clothing and electronics industries.
Taiwan’s economy quickly overcame the effects of the 1997 Asian crisis.
Taiwanese exports expanded strongly in 2000, thanks to the currency devaluation. P113 grew at a rate of 6.3%. In 2001, it suffered the effects of the slowdown in the North American economy and the drop in international demand for electronic and high-tech products. Taiwan produces half of the personal computer circuit boards in the world.
Foreign policy and independence
Taiwan’s problem is related to foreign policy, since China does not recognize it as independent, considering it an integral part of its territory, as expressed in the speech of “One China”; it does not go so far as to omit the possibility of military intervention on the island, even though it would bring problems with the USA, Taiwan’s ally since its emergence.
The Taipei government rules out declaring unilateral independence as long as Beijing does not use military force to reunify the two Chinas. Since 2008, China and Taiwan have maintained a free trade agreement.
In 2016, tensions between Beijing and Taipei rose to the level with Tsai Ing-wen’s victory for Taiwan’s president. With an independent speech, with an absolute majority in Parliament, the president said that she will guarantee democracy and, mainly, the popular will and freedom of choice of the population in relation to Beijing, contrary to the stance of her predecessor Ma Ying-jeou .
However, existing political-trade agreements will be respected, said the new government, which also ensured the maintenance of peace and political stability with China.