government - TW

Question 1

elite economic bureaucracy

Answer 1

power concentrated in the hands of 12 men

• mostly technocrats with similar educational backgrounds
• longevity of political careers: continuity in strategic planning over 30 years hence stable, incremental changes
  1. Chiang Kai Shek 1950-1975
  -> continuity in policy, smooth transition from one phase of economic development to another
  -> allowed for heavily centralized planning and close coordination between government, Industrial Development Bureau (IDB) and Central Bank

Question 2

1950s agriculture policies (ISI)

Answer 2

effect

land reforms, investment from risk, assuring fertilizer supply
- 1949-1953 government imposed a series of land reforms
- landlord class eradicated
- by 1973 almost 80% of agricultural population was owner-cultivars
- recurrent resources from government, increase productivity and served as basis of economic transformation in the 1970s

[between 1954-1967, agricultural production grew at 4.4% a year, faster than just about anywhere else in Asia]

-» generated surplus for industrial development and foreign exchange

Question 3

1960s ISI to EOI

Answer 3

1959 19-point program of Economic and Financial Reform

• stimulate exports through direct incentives
• lower interest loans and tax exemption for export businesses (carried to 1970s)
• 1965 creation of EPZ, Kaohsiung to attract foreign companies and foreign capitals

Question 4

controlled liberalisation during gradual transition from ISI to EOI

Answer 4

effect

highly protected domestic market and highly protectionistic

• tariffs on imported yarn and fabrics, controlled access to raw materials

1958-1959 textile exports increased by almost 200%, grew at over 40% the next several years, mostly sent to the USA

Question 5

effect of government policies (1960s)

Answer 5

(as a result of heavy state involvement in driving exports, TW’s foreign trade and exports soared in the 1960s)

• exported a total of US$569 million worth of industrial and agricultural goods in 1966 alone
• trade surplus generated US$474 million by early 1970s
  -» maturity of TW’s manufacturing industries, ready for liberalisation and exponential growth

Question 6

1970s: government’s ability to adapt to negative circumstances (Cold War aid in 1960s, currency volatility in 1971, Oil chocks in 1970s and protectionism in late 70s-80s)

Answer 6

1. diversification into high-tech automated industries, investment in higher education
   Chiang Cheng Kuo’s 10 major construction protects :
   - transport infrastructure (highway, rail, sea and air transport)
   - ship-building (oil refining, steel manufacturing, electrical power generation)
   -> generated jobs, domestic demand and investment opportunities
2. opened doors to even more investments but HIGHLY SELECTIVE
   - only those that would not pose direct competition to own industries or able to provide technological upgrades to enhance own industries
   - foreign investment never a significant component in TW economy
   [by 1971, overseas Chinese and other foreign investments amounted to 1/7 of total registered capital]
3. diplomacy with Saudi Arabia and Jordan (OPEC)
   - provided TW with 750 million barrels of oil, cushioned effects of both oil crises while also enabling
   - 10 major construction projects to promote further EOI growth and attract investment opportunities in 1980s
4. adjusted currency, floated against basket of currencies in 1978
   (oil shocks)

Question 7

change

government role receded, projected their role through SMEs

Answer 7

rule for Promotion of Small and Medium Enterprises (1967) revised multiple times to aid SME productivity

• 1981 SME Administration Bureau
• Network Capitalism - guanxi networks