How Taiwan Managed to Grow

This chapter examines how Taiwan transformed its economy in the post-war era, focusing on four different periods: import-substitution industrialization in the 1950s, export promotion and secondary import substitution in the 1960s and 1970s, entry into the high tech sector from the 1980s, and liberalization and globalization in the 1990s. Taiwan’s economic transformation was successful mainly due to suitable industrial policies which were adaptive to the changing situation. The country has emerged from being a low income to being a high income economy in the post-war period because it was able to sustain its quick pace of development throughout these decades. Its GDP and per capita GNP grew at an average rate of 9.2 and 5.8 per cent each year, respectively, in the first three decades of the postwar period, 1951–1980, and 6.3 and 4.9 per cent during 1981–2014. Despite encountering various challenges along the way, Taiwan experienced several rounds of structural transformation.