The State and Taiwan's Economic Development - The Colonial Heritage - Indicators of Taiwan's Economic Performance - Average Annual Growth Rates

Oct 20, 2026

Uploaded by Hazel

Analyzes Taiwan’s post-World War II economic growth by focusing on the state’s role in capital accumulation, including surplus extraction from agriculture and industrial profit rates. Explains how initial Guomindang goals were military and geopolitical, creating a seeming paradox for successful development, with American aid as a mitigating factor. Argues that economic development reshaped the military’s position in the state apparatus. Reviews Japanese colonial planning, commercialization of agriculture, and presents indicators of economic performance through average annual growth rates.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages29

Reading Time1 h 13 min

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The State and Taiwan's Economic Development

The Colonial Heritage

Indicators of Taiwan's Economic Performance - Average Annual Growth Rates

# 3. The State and Taiwan's EconomicDevelopment Alice H.Amsden Two features of Taiwan's post-World War II history are striking.First,it isone of the few nonsocialist economies since Japan to rise from the grossestpoverty and to enter the world of the“developed."”¹Second,the state inTaiwan has played a leading role in the process of capital accumulation.Ithas positioned itself to prevail on key economic parameters such as thesize of the surplus extracted from agriculture and the rate of profit in in-dustry.To understand Taiwan's economic growth,therefore,it is neces-sary to understand its potent state. The challenge of understanding the role of the state in Taiwan's eco-nomic development is increased by the fact that the state's initial aims wereso clearly military and geopolitical rather than economic.When Taiwanwas occupied by the vanquished Nationalist government in 1949,theGuomindang was obsessed with one objective:military buildup in order toretake the Mainland.As Edwin Winckler bluntly put it,'The Jiang Jie-Shiforces,if they had had their own way,wouldn't have spent one penny oneconomic development."2 Given that militarism and economic develop-ment must to some extent operate at cross-purposes,competing for thesame scarce resources,Taiwan's success must seem somewhat paradoxi-cal. If the role of the state is critical to economic development,why shouldan economy under the heel of the military end up with a “good claim to beranked as the most successful of the developing countries'"?³One of theobvious factors mitigating the negative consequences of militarism in theTaiwan case was American aid,which diminished the extent of resourcecompetition.I shall try to show,however,that this was not the only,ornecessarily even the most important,factor in allowing economic growthto arise out of militarism.Rather,I shallargue that the reality of economicdevelopment itself both seduced the military away from its initial orienta-tion and changed its position within the state apparatus,which then freedup the process of capital accumulation still further. Although the Guomindang state in Taiwan's “economic miracle"is ourcentral focus,it is necessary to take into account other factors that favoredthe island's economic development after World War I.One of the mostimportant of these is the legacy of the Japanese colonial period.We shallbegin,then,with a discussion of the colonial period and from there look atthe Guomindang state itself,its role in agriculture and industry,and itsgradual transformation from a state in which the preeminence of militaryaims was overwhelming to one in which military aims came to coexist withan evermore absorbing interest in economic growth. The Colonial Heritage⁴ It is a misconception that the Taiwan miracle commenced with the exportof labor-intensive manufactures and a reduction of government manage-ment of trade and monetary matters in the decade of the 1960s.Taiwanalready enjoyed a relatively fast rising real gross domestic product(GDP)in the 1950s(Table 3.1).Agriculture was then the dominant sector,and theeconomic regime in industry,as in many other underdeveloped countries,was one of protection of infant industries.Growth was also rapid duringthe years of Japanese domination (1895-1945).Excluding the war years of1941-45,the per capita income of the agricultural sector almost doubled inhalf a century.This is a rather impressive figure given that the populationrose by approximately 43%.5 The economy that the Japanese fashioned in Taiwan was achieved bymeans of deliberate planning and government ownership of major re-sources (in partnership with private Japanese capitalists).The dominanceof the Japanese colonial administration in Taiwan's economy mirrored thedominant role of the Meiji government in Japan proper,which distin-guished it in important respects from the colonial offices of England andFrance.⁶The Jiang Jie-Shi forces benefited enormously from their inheri-tance of Japanese state mono

FAQs

Why does the state’s role matter for Taiwan’s economic development?

Because the Taiwan state guided capital accumulation by influencing surplus extracted from agriculture and the rate of profit in industry.

What paradox arises from Taiwan being governed by a military-oriented regime?

The text notes that since the military and economic development compete for scarce resources, Taiwan’s successful development under military control seems contradictory.

How did the Japanese colonial period shape Taiwan’s later economic performance?

The Japanese used deliberate planning and government ownership of major resources, and they promoted a commercially oriented agricultural system, contributing to fast growth during Japanese domination.

Oct 20, 2026

Uploaded by Hazel