The Remarkable Story of Taiwan

1949 Population Boom

• Surge: Population increased by 25% in less than 3 years
• Newcomers: Included 600,000 soldiers
• Reason: Republic of China’s government and soldiers retreating after losing civil war

Historical Context

• Civil War: Between Chinese Communists (Mao Zedong) and Nationalist government (Chiang Kai-shek)
• Japanese Rule: Taiwan was a colony exploited by the Japanese empire
• World War II: Bombing destroyed infrastructure; Taiwan returned to China

Post-War Exploitation

• Civil War Resources: Siphoned to fight Communists; Taiwan impoverished
• Military Outpost: Ruled as an authoritarian state
• Economic Status (1950): Extremely poor with a GDP per capita lower than Haiti, Madagascar, and the Congo

Taiwan’s Transformation

• Modern Status: Developed country with high median wealth, democratic government, leading industries
• Key Companies: Foxconn, dominates semiconductor manufacturing

Historical Economic Development

Pre-1894 Taiwan

• Chinese Rule: Under China but self-sufficient
• Japanese Empire: Victory in 1894 led to Taiwan becoming Japan’s first colony
• Japanese Policies: Transformation into agricultural and later industrial productivity base
• Post-War: Returned to China post WWII

February 28th Incident (1947)

• Event: Public uprising against KMT government, suppression led to estimated 28,000 deaths
• Tensions: Poor management, resources siphoned for civil war, influx of refugees

Land Reforms & Industrialization

• Inflation Control: Stabilized using China’s gold reserves
• US Aid: $3.9 billion in military and economic aid
• Agricultural Reforms: Land redistribution tripled farmers’ incomes

1950s Industrial Strategy

• Import Substitutes: Reduce dependence on imports via local production
• Growth: Initial industry growth led to eventual stagnation
• US Aid Cut: Forced Taiwan to focus on export-led growth

Export-Led Growth

• 1958 Reforms: Unified and devalued exchange rates, dismantled tariffs
• Export Processing Zones: Attracted foreign manufacturers; tech giants invested
• Success: Rapid growth, dominated global markets in low-end and high-tech products

Political Shifts

• UN Expulsion: Replaced by the People's Republic of China
• Chiang Kai-shek's Death: Shifted government focus to Taiwan's development
• Economic Planning (1970s): Major infrastructure projects laid groundwork for continued growth

High-Tech Industry & Education

• Educational Investment: Doubling spending, emphasis on higher education
• Semiconductor Industry: Pioneering foundries like TSMC

1980s Political & Economic Changes

• Political Liberalization: Lifted martial law, allowed opposition parties
• Plaza Accord: Forced currency appreciation hurt manufacturing profits
• Manufacturing Exodus: Moved labor-intensive industries to China

Modern Tensions

• China Relations: Economic interdependence amid rising political tensions
• Future: Resilience of Taiwanese people vital for future development amidst geopolitical challenges