Economic history of Taiwan
Encyclopedia
The recordkeeping and development of the economic history of Taiwan started in the Age of Discovery
. In the 17th century, the Europe
ans realized that Taiwan
is located on the strategic
cusp between the Far East
and Southeast Asia
. Two main European empire
s that competed to colonize it were the Dutch
and Spanish Empire
s. Taiwan also became an intermediate destination for trade
between Western Europe
an empires and East Asia
states. The history of Taiwan
as a colony
of the Dutch Empire
, Kingdom of Tungning
, Qing China, and Empire of Japan
between 1630 and 1945 was based heavily on economics
.
In the 1950s, the Republic of China
(ROC) government, retreated to Taiwan after losing the Chinese Civil War
, carried out land reform
policies such as the 375 Rent Reduction. In the 1960s, the agrarian economy was replaced with light industry
as small and medium enterprises started to form. From 1966 to 1980, Taiwan's economy was gradually stabilized as the Ten Major Construction Projects
laid a foundation in further economic developments. After the 1980s, the role of government in the economy gradually lessened as many government-owned corporation
s were privatized.
has been inhabited by human since the late Upper Paleolithic
(ca. 50,000 - 10,000 BP). One of the first civilizations developed was the Changpin culture in southern Taiwan. Many archaeological site
s of Neolithic
civilizations were found in the Taipei basin
in northern Taiwan. The economic activities during this period, which cannot be described with detail as there was no written language
, were fishing
, gathering, and farming.
About 2,000 years ago, northern Taiwan entered the Bronze Age
. Iron metallurgy
and advanced agricultural techniques strengthened economic activities. The Shihsanhang culture rose during this period and had weaving
technology. It did not end until the arrival of Han Chinese
about 1,000 years ago.
Most scholars believe that the Shihsanhang culture represented the activities of the Taiwanese Plain Aborigines. Although there is no evidence to support this, it is generally recognized that the Taiwanese aboriginal tribes economically relied on fishing
, hunting
, and pursued slash-and-burn agriculture.
In the early 17th century, the Dutch East India Company
originally only traded along the Pescadores
. However, the Ming Dynasty
claimed the archipelago
to be part of its territory and drove out the Dutch. The Dutch were forced to retreat to the main island of Taiwan
, then known as Formosa
. The established a trading post
in Tayoan (modern-day Tainan City).
The main purpose of the occupation of Taiwan was to trade with mainland China
, Japan
, Korea
, and Southeast Asia
, attempting to monopolizing
trade in East Asia. The main Taiwanese resources that they exported were sugar
, sika deer
skin, deer meat, antler
s, rattan
, and rice
. By 1658, the company exported sugar to Persia, Japan
, and Jakarta
and had about 35 trading posts in Asia. Tayoan gained 25.6% profit, ranked second out of all of the Dutch trading posts, after Nagasaki, Japan
. However, the profit was distributed to shareholder
s of the company, and not the local Taiwanese.
At the time, the Japanese were also interested in commercial activities in Taiwan. As a result of the economic challenge from the Japanese, the Dutch East India Company levied heavy taxes on the Japanese merchants. In 1628, the Japanese kidnapped governor Pieter Nuyts
and closed down the trading post in Nagasaki. It was reopened again in 1632, after Nuyts was extradited to be jailed in Japan.
, Koxinga
drove the Dutch out of Taiwan. Under his administration, Taiwan became an economically independent state politically ruled by his kingdom. Koxinga established land distribution systems in order to efficiently supply food
for his private army.
The British Empire
and Japan
continued to trade with Taiwan as an independent state. The English East India Company even established a commercial treaty
with the Kingdom of Tungning
, which was also known as the Kingdom of Taiwan.
After defeating Koxinga's private army, the Qing government
had no interest in improving the economy of Taiwan, calling it a Huawaizhidi (uncivilized land). Therefore the economic activities mostly came from the settlements of migrants. The most significant economic development during this time period was the establishment of irrigation
systems and hydraulic engineering
projects. The agricultural surplus caused by these improvements led to the export of rice to mainland China
.
On the other hand, the commercial activities continued throughout major trading port
s. Tainan
, Lukang, and Banka became the three largest cities in Taiwan.
In 1858, four ports were opened in Anping, Ta-kau
, Keelung
, and Tamsui as a result of pressures from the British
and French Empire
s after the Second Opium War
. These trading ports exported Taiwanese tea
and camphor
and further boosted the economy of Taiwan.
For the most part, Taiwan's economy during the Japanese rule period was a colonial economy. For example, the human and natural resource
s of Taiwan were used to aid both the economic and military
development of Japan. This policy began under Governor-General
Kodama Gentarō and reached its peak in 1943, in the middle of World War II
. Before the 1920s, the sugar industry dominated Taiwan's economy, while from 1920 to 1930, rice became the primary export. During these two periods, the primary economic policy of the Office of the Governor-General (OGG) was "industry for Japan, agriculture for Taiwan". After 1930, due to war needs the OGG began to pursue a policy of industrialization.
Under Governor Akashi Motojiro
, a vast swamp
in central Taiwan was transformed into a huge dam
in order to build a hydraulic power plant for industrialization. The dam and its surrounding area, widely known as Sun Moon Lake
(Nichigetsutan) today, has become a must-see for foreign tourist
s visiting Taiwan.
Although the main focus of each of these periods differed, the primary goal throughout the entire time was increasing Taiwan's productivity
to satisfy demand within Japan, a goal which was successfully achieved. As part of this process, new ideas, concepts, and values were introduced to the Taiwanese; also, several public works projects, such as railways, public education
, and telecommunication
s, were implemented. As the economy grew, society stabilized, politics was gradually liberalized, and popular support for the colonial government began to increase. Taiwan thus served as a showcase for Japan's propaganda on the colonial efforts throughout Asia, as displayed during the 1935 Taiwan Exposition.
retreat to Taiwan, the Taiwanese society was relatively stable politically in the 1950s. However, it faced some obstacles economically as a result of the mass destruction during World War II
and the Chinese hyperinflation
in the 1940s. The sudden increase in population caused by the Kuomintang migration from mainland China
also affected Taiwan's economy.
Facing the economic pressure, the Kuomintang regime established several economic plans and policies. Of primary importance for the long-run growth of this economy was the commitment to education, beginning with universal elementary education, expanded to upper level schooling as basic levels of literacy were attained. The New Taiwan dollar
s were issued to replace the Old Taiwan dollar
s. Successful land reform also took place, enabled by the KMT's interesting role as recent immigrants, and not vested landowners. In addition, the United States
aid also helped the reformation of Taiwan's economy.
The government also carried out an import substitution
policy, taking what was obtained by agriculture
to give support to the industrial
sector, trading agricultural product exports for foreign currency to import industrial machinery, thus developing the industrial sector. The government raised tariff
s, controlled foreign exchange and restricted imports in order to protect domestic industry. By the 1960s, Taiwan's import exchange industry was faced with the problem of saturating the domestic market. At the same time, the factories of some industrialized nations, because of rising wages and other reasons, slowly moved to certain areas that had both basic industry and low labor costs. By slow steps, the economic policy of Taiwan changed to pursue export expansion
under advice of academic economists such as Ta-Chung Liu and Sho-Chieh Tsiang
of Cornell University
. They also promoted allowing interest rates to rise, to encourage domestic savings and expand the amount of resources available to fund new businesses. Additional academic advisers also members of Academic Sinica provided sound advice encouraging innovation in agricultural techniques, enabling one of the few successful takeoffs toward modern growth based on agricultural investment in cash crops for export.
A major turning point in Taiwan's economy was during the 1970s. The expulsion of the Republic of China
(Taiwan) from the United Nations
in 1971, the 1973 oil crisis
, and the switching of American diplomatic relations heavily affected the economy of Taiwan. But executive premier Chiang Ching-kuo
's Ten Major Construction Projects
served as the basis for heavy industrial
development in Taiwan.
After the 1980s, Taiwan's economy began to stabilize. It eventually became one of the Four Asian Tigers as a dynamic capitalist economy. The 1997 Asian Financial Crisis did not affect Taiwan nearly as harshly due to greater restrictions on the outflow of invested foreign capital than were in place in countries hurt by rapid capital flight. The Chen Shui-bian
administration in the 2000s focused on joining international organization
s. Taiwan was able to join the World Trade Organization
in 2002.
Age of Discovery
The Age of Discovery, also known as the Age of Exploration and the Great Navigations , was a period in history starting in the early 15th century and continuing into the early 17th century during which Europeans engaged in intensive exploration of the world, establishing direct contacts with...
. In the 17th century, the Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
ans realized that Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
is located on the strategic
Military strategy
Military strategy is a set of ideas implemented by military organizations to pursue desired strategic goals. Derived from the Greek strategos, strategy when it appeared in use during the 18th century, was seen in its narrow sense as the "art of the general", 'the art of arrangement' of troops...
cusp between the Far East
Far East
The Far East is an English term mostly describing East Asia and Southeast Asia, with South Asia sometimes also included for economic and cultural reasons.The term came into use in European geopolitical discourse in the 19th century,...
and Southeast Asia
Southeast Asia
Southeast Asia, South-East Asia, South East Asia or Southeastern Asia is a subregion of Asia, consisting of the countries that are geographically south of China, east of India, west of New Guinea and north of Australia. The region lies on the intersection of geological plates, with heavy seismic...
. Two main European empire
Empire
The term empire derives from the Latin imperium . Politically, an empire is a geographically extensive group of states and peoples united and ruled either by a monarch or an oligarchy....
s that competed to colonize it were the Dutch
Dutch Empire
The Dutch Empire consisted of the overseas territories controlled by the Dutch Republic and later, the modern Netherlands from the 17th to the 20th century. The Dutch followed Portugal and Spain in establishing an overseas colonial empire, but based on military conquest of already-existing...
and Spanish Empire
Spanish Empire
The Spanish Empire comprised territories and colonies administered directly by Spain in Europe, in America, Africa, Asia and Oceania. It originated during the Age of Exploration and was therefore one of the first global empires. At the time of Habsburgs, Spain reached the peak of its world power....
s. Taiwan also became an intermediate destination for trade
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
between Western Europe
Western Europe
Western Europe is a loose term for the collection of countries in the western most region of the European continents, though this definition is context-dependent and carries cultural and political connotations. One definition describes Western Europe as a geographic entity—the region lying in the...
an empires and East Asia
East Asia
East Asia or Eastern Asia is a subregion of Asia that can be defined in either geographical or cultural terms...
states. The history of Taiwan
History of Taiwan
Taiwan was first populated by Negrito, and then Austronesian people. It was colonized by the Dutch in the 17th century, followed by an influx of Han Chinese including Hakka immigrants from areas of Fujian and Guangdong of mainland China, across the Taiwan Strait...
as a colony
Colony
In politics and history, a colony is a territory under the immediate political control of a state. For colonies in antiquity, city-states would often found their own colonies. Some colonies were historically countries, while others were territories without definite statehood from their inception....
of the Dutch Empire
Dutch Empire
The Dutch Empire consisted of the overseas territories controlled by the Dutch Republic and later, the modern Netherlands from the 17th to the 20th century. The Dutch followed Portugal and Spain in establishing an overseas colonial empire, but based on military conquest of already-existing...
, Kingdom of Tungning
Kingdom of Tungning
The Kingdom of Tungning was a government that ruled Taiwan between 1661 and 1683. A pro-Ming Dynasty state, it was founded by Koxinga after the Ming government in mainland China was replaced by the Manchu-ruled Qing Dynasty...
, Qing China, and Empire of Japan
Empire of Japan
The Empire of Japan is the name of the state of Japan that existed from the Meiji Restoration on 3 January 1868 to the enactment of the post-World War II Constitution of...
between 1630 and 1945 was based heavily on economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
.
In the 1950s, the Republic of China
Republic of China
The Republic of China , commonly known as Taiwan , is a unitary sovereign state located in East Asia. Originally based in mainland China, the Republic of China currently governs the island of Taiwan , which forms over 99% of its current territory, as well as Penghu, Kinmen, Matsu and other minor...
(ROC) government, retreated to Taiwan after losing the Chinese Civil War
Chinese Civil War
The Chinese Civil War was a civil war fought between the Kuomintang , the governing party of the Republic of China, and the Communist Party of China , for the control of China which eventually led to China's division into two Chinas, Republic of China and People's Republic of...
, carried out land reform
Land reform
[Image:Jakarta farmers protest23.jpg|300px|thumb|right|Farmers protesting for Land Reform in Indonesia]Land reform involves the changing of laws, regulations or customs regarding land ownership. Land reform may consist of a government-initiated or government-backed property redistribution,...
policies such as the 375 Rent Reduction. In the 1960s, the agrarian economy was replaced with light industry
Light industry
Light industry is usually less capital intensive than heavy industry, and is more consumer-oriented than business-oriented...
as small and medium enterprises started to form. From 1966 to 1980, Taiwan's economy was gradually stabilized as the Ten Major Construction Projects
Ten Major Construction Projects
The Ten Major Construction Projects were national infrastructure projects during the 1970s in Taiwan. The government believed the state lacked key utilities such as highways, seaports, airports, and power plants. Moreover, Taiwan was experiencing significant effects from the 1973 oil crisis...
laid a foundation in further economic developments. After the 1980s, the role of government in the economy gradually lessened as many government-owned corporation
Government-owned corporation
A government-owned corporation, state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, or parastatal is a legal entity created by a government to undertake commercial activities on behalf of an owner government...
s were privatized.
Prehistory
According to archaeological evidences, TaiwanTaiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
has been inhabited by human since the late Upper Paleolithic
Upper Paleolithic
The Upper Paleolithic is the third and last subdivision of the Paleolithic or Old Stone Age as it is understood in Europe, Africa and Asia. Very broadly it dates to between 40,000 and 10,000 years ago, roughly coinciding with the appearance of behavioral modernity and before the advent of...
(ca. 50,000 - 10,000 BP). One of the first civilizations developed was the Changpin culture in southern Taiwan. Many archaeological site
Archaeological site
An archaeological site is a place in which evidence of past activity is preserved , and which has been, or may be, investigated using the discipline of archaeology and represents a part of the archaeological record.Beyond this, the definition and geographical extent of a 'site' can vary widely,...
s of Neolithic
Neolithic
The Neolithic Age, Era, or Period, or New Stone Age, was a period in the development of human technology, beginning about 9500 BC in some parts of the Middle East, and later in other parts of the world. It is traditionally considered as the last part of the Stone Age...
civilizations were found in the Taipei basin
Taipei Basin
Taipei Basin is a geographic region in northern Taiwan. It is the second largest basin in Taiwan. The basin is bounded by Yangmingshan to the north, Linkou mesa to the west, and the Ridge of Xueshan Range to the southeast. The shape of the basin is close to a triangle...
in northern Taiwan. The economic activities during this period, which cannot be described with detail as there was no written language
Written language
A written language is the representation of a language by means of a writing system. Written language is an invention in that it must be taught to children, who will instinctively learn or create spoken or gestural languages....
, were fishing
Fishing
Fishing is the activity of trying to catch wild fish. Fish are normally caught in the wild. Techniques for catching fish include hand gathering, spearing, netting, angling and trapping....
, gathering, and farming.
About 2,000 years ago, northern Taiwan entered the Bronze Age
Bronze Age
The Bronze Age is a period characterized by the use of copper and its alloy bronze as the chief hard materials in the manufacture of some implements and weapons. Chronologically, it stands between the Stone Age and Iron Age...
. Iron metallurgy
Metallurgy
Metallurgy is a domain of materials science that studies the physical and chemical behavior of metallic elements, their intermetallic compounds, and their mixtures, which are called alloys. It is also the technology of metals: the way in which science is applied to their practical use...
and advanced agricultural techniques strengthened economic activities. The Shihsanhang culture rose during this period and had weaving
Weaving
Weaving is a method of fabric production in which two distinct sets of yarns or threads are interlaced at right angles to form a fabric or cloth. The other methods are knitting, lace making and felting. The longitudinal threads are called the warp and the lateral threads are the weft or filling...
technology. It did not end until the arrival of Han Chinese
Han Chinese
Han Chinese are an ethnic group native to China and are the largest single ethnic group in the world.Han Chinese constitute about 92% of the population of the People's Republic of China , 98% of the population of the Republic of China , 78% of the population of Singapore, and about 20% of the...
about 1,000 years ago.
Most scholars believe that the Shihsanhang culture represented the activities of the Taiwanese Plain Aborigines. Although there is no evidence to support this, it is generally recognized that the Taiwanese aboriginal tribes economically relied on fishing
Fishing
Fishing is the activity of trying to catch wild fish. Fish are normally caught in the wild. Techniques for catching fish include hand gathering, spearing, netting, angling and trapping....
, hunting
Hunting
Hunting is the practice of pursuing any living thing, usually wildlife, for food, recreation, or trade. In present-day use, the term refers to lawful hunting, as distinguished from poaching, which is the killing, trapping or capture of the hunted species contrary to applicable law...
, and pursued slash-and-burn agriculture.
Contacts with Europe
Dutch East India Company
The Dutch East India Company was a chartered company established in 1602, when the States-General of the Netherlands granted it a 21-year monopoly to carry out colonial activities in Asia...
originally only traded along the Pescadores
Pescadores
The Penghu Islands, also known as Pescadores are an archipelago off the western coast of Taiwan in the Taiwan Strait consisting of 90 small islands and islets covering an area of 141 square kilometers....
. However, the Ming Dynasty
Ming Dynasty
The Ming Dynasty, also Empire of the Great Ming, was the ruling dynasty of China from 1368 to 1644, following the collapse of the Mongol-led Yuan Dynasty. The Ming, "one of the greatest eras of orderly government and social stability in human history", was the last dynasty in China ruled by ethnic...
claimed the archipelago
Archipelago
An archipelago , sometimes called an island group, is a chain or cluster of islands. The word archipelago is derived from the Greek ἄρχι- – arkhi- and πέλαγος – pélagos through the Italian arcipelago...
to be part of its territory and drove out the Dutch. The Dutch were forced to retreat to the main island of Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
, then known as Formosa
Formosa
Formosa or Ilha Formosa is a Portuguese historical name for Taiwan , literally meaning, "Beautiful Island". The term may also refer to:-Places:* Formosa Strait, another name for the Taiwan Strait...
. The established a trading post
Trading post
A trading post was a place or establishment in historic Northern America where the trading of goods took place. The preferred travel route to a trading post or between trading posts, was known as a trade route....
in Tayoan (modern-day Tainan City).
The main purpose of the occupation of Taiwan was to trade with mainland China
Mainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...
, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, Korea
Korea
Korea ) is an East Asian geographic region that is currently divided into two separate sovereign states — North Korea and South Korea. Located on the Korean Peninsula, Korea is bordered by the People's Republic of China to the northwest, Russia to the northeast, and is separated from Japan to the...
, and Southeast Asia
Southeast Asia
Southeast Asia, South-East Asia, South East Asia or Southeastern Asia is a subregion of Asia, consisting of the countries that are geographically south of China, east of India, west of New Guinea and north of Australia. The region lies on the intersection of geological plates, with heavy seismic...
, attempting to monopolizing
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
trade in East Asia. The main Taiwanese resources that they exported were sugar
Sugar
Sugar is a class of edible crystalline carbohydrates, mainly sucrose, lactose, and fructose, characterized by a sweet flavor.Sucrose in its refined form primarily comes from sugar cane and sugar beet...
, sika deer
Sika Deer
The Sika Deer, Cervus nippon, also known as the Spotted Deer or the Japanese Deer, is a species of deer native to much of East Asia and introduced to various other parts of the world...
skin, deer meat, antler
Antler
Antlers are the usually large, branching bony appendages on the heads of most deer species.-Etymology:Antler originally meant the lowest tine, the "brow tine"...
s, rattan
Rattan
Rattan is the name for the roughly 600 species of palms in the tribe Calameae, native to tropical regions of Africa, Asia and Australasia.- Structure :...
, and rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
. By 1658, the company exported sugar to Persia, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, and Jakarta
Jakarta
Jakarta is the capital and largest city of Indonesia. Officially known as the Special Capital Territory of Jakarta, it is located on the northwest coast of Java, has an area of , and a population of 9,580,000. Jakarta is the country's economic, cultural and political centre...
and had about 35 trading posts in Asia. Tayoan gained 25.6% profit, ranked second out of all of the Dutch trading posts, after Nagasaki, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
. However, the profit was distributed to shareholder
Shareholder
A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....
s of the company, and not the local Taiwanese.
At the time, the Japanese were also interested in commercial activities in Taiwan. As a result of the economic challenge from the Japanese, the Dutch East India Company levied heavy taxes on the Japanese merchants. In 1628, the Japanese kidnapped governor Pieter Nuyts
Pieter Nuyts
Pieter Nuyts or Nuijts was a Dutch explorer, diplomat, and politician.He was part of a landmark expedition of the Dutch East India Company in 1626–27, which mapped the southern coast of Australia. He became the Dutch ambassador to Japan in 1627, and he was appointed Governor of Formosa in the same...
and closed down the trading post in Nagasaki. It was reopened again in 1632, after Nuyts was extradited to be jailed in Japan.
Early Chinese administration
After the Siege of Fort ZeelandiaSiege of Fort Zeelandia
The Siege of Fort Zeelandia , which took place in 1661 and 1662, ended the Dutch East India Company's rule over Taiwan and began the Kingdom of Tungning's rule over the island...
, Koxinga
Koxinga
Koxinga is the customary Western spelling of the popular appellation of Zheng Chenggong , a military leader who was born in 1624 in Hirado, Japan to Zheng Zhilong, a Chinese merchant/pirate, and his Japanese wife and died in 1662 on the island of Formosa .A Ming loyalist and the arch commander of...
drove the Dutch out of Taiwan. Under his administration, Taiwan became an economically independent state politically ruled by his kingdom. Koxinga established land distribution systems in order to efficiently supply food
Food
Food is any substance consumed to provide nutritional support for the body. It is usually of plant or animal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals...
for his private army.
The British Empire
British Empire
The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...
and Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
continued to trade with Taiwan as an independent state. The English East India Company even established a commercial treaty
Treaty
A treaty is an express agreement under international law entered into by actors in international law, namely sovereign states and international organizations. A treaty may also be known as an agreement, protocol, covenant, convention or exchange of letters, among other terms...
with the Kingdom of Tungning
Kingdom of Tungning
The Kingdom of Tungning was a government that ruled Taiwan between 1661 and 1683. A pro-Ming Dynasty state, it was founded by Koxinga after the Ming government in mainland China was replaced by the Manchu-ruled Qing Dynasty...
, which was also known as the Kingdom of Taiwan.
After defeating Koxinga's private army, the Qing government
Qing Dynasty
The Qing Dynasty was the last dynasty of China, ruling from 1644 to 1912 with a brief, abortive restoration in 1917. It was preceded by the Ming Dynasty and followed by the Republic of China....
had no interest in improving the economy of Taiwan, calling it a Huawaizhidi (uncivilized land). Therefore the economic activities mostly came from the settlements of migrants. The most significant economic development during this time period was the establishment of irrigation
Irrigation
Irrigation may be defined as the science of artificial application of water to the land or soil. It is used to assist in the growing of agricultural crops, maintenance of landscapes, and revegetation of disturbed soils in dry areas and during periods of inadequate rainfall...
systems and hydraulic engineering
Hydraulic engineering
This article is about civil engineering. For the mechanical engineering discipline see Hydraulic machineryHydraulic engineering as a sub-discipline of civil engineering is concerned with the flow and conveyance of fluids, principally water and sewage. One feature of these systems is the extensive...
projects. The agricultural surplus caused by these improvements led to the export of rice to mainland China
Mainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...
.
On the other hand, the commercial activities continued throughout major trading port
Port
A port is a location on a coast or shore containing one or more harbors where ships can dock and transfer people or cargo to or from land....
s. Tainan
Tainan
Tainan City is a city in southern Taiwan. It is the fifth largest after New Taipei, Kaohsiung, Taichung, and Taipei. It was formerly a provincial city, and in 2010, the provincial city merged with the adjacent Tainan County to form a single special municipality. Tainan faces the Taiwan Strait in...
, Lukang, and Banka became the three largest cities in Taiwan.
In 1858, four ports were opened in Anping, Ta-kau
Kaohsiung
Kaohsiung is a city located in southwestern Taiwan, facing the Taiwan Strait on the west. Kaohsiung, officially named Kaohsiung City, is divided into thirty-eight districts. The city is one of five special municipalities of the Republic of China...
, Keelung
Keelung
Keelung City is a major port city situated in the northeastern part of Taiwan. It borders New Taipei and forms the Taipei–Keelung metropolitan area, along with the Taipei and New Taipei. Nicknamed the Rainy Port for its frequent rain and maritime role, the city is Taiwan's second largest seaport...
, and Tamsui as a result of pressures from the British
British Empire
The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...
and French Empire
French colonial empire
The French colonial empire was the set of territories outside Europe that were under French rule primarily from the 17th century to the late 1960s. In the 19th and 20th centuries, the colonial empire of France was the second-largest in the world behind the British Empire. The French colonial empire...
s after the Second Opium War
Second Opium War
The Second Opium War, the Second Anglo-Chinese War, the Second China War, the Arrow War, or the Anglo-French expedition to China, was a war pitting the British Empire and the Second French Empire against the Qing Dynasty of China, lasting from 1856 to 1860...
. These trading ports exported Taiwanese tea
Tea
Tea is an aromatic beverage prepared by adding cured leaves of the Camellia sinensis plant to hot water. The term also refers to the plant itself. After water, tea is the most widely consumed beverage in the world...
and camphor
Camphor
Camphor is a waxy, white or transparent solid with a strong, aromatic odor. It is a terpenoid with the chemical formula C10H16O. It is found in wood of the camphor laurel , a large evergreen tree found in Asia and also of Dryobalanops aromatica, a giant of the Bornean forests...
and further boosted the economy of Taiwan.
Japanese administration
For the most part, Taiwan's economy during the Japanese rule period was a colonial economy. For example, the human and natural resource
Natural resource
Natural resources occur naturally within environments that exist relatively undisturbed by mankind, in a natural form. A natural resource is often characterized by amounts of biodiversity and geodiversity existent in various ecosystems....
s of Taiwan were used to aid both the economic and military
Military
A military is an organization authorized by its greater society to use lethal force, usually including use of weapons, in defending its country by combating actual or perceived threats. The military may have additional functions of use to its greater society, such as advancing a political agenda e.g...
development of Japan. This policy began under Governor-General
Governor-General of Taiwan
The position of Governor-General of Taiwan existed when Taiwan and the Pescadores were part of the Empire of Japan, from 1895 to 1945.The Japanese Governors-General were members of the Diet, civilian officials, Japanese nobles or generals...
Kodama Gentarō and reached its peak in 1943, in the middle of World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
. Before the 1920s, the sugar industry dominated Taiwan's economy, while from 1920 to 1930, rice became the primary export. During these two periods, the primary economic policy of the Office of the Governor-General (OGG) was "industry for Japan, agriculture for Taiwan". After 1930, due to war needs the OGG began to pursue a policy of industrialization.
Under Governor Akashi Motojiro
Akashi Motojiro
-Notes:...
, a vast swamp
Swamp
A swamp is a wetland with some flooding of large areas of land by shallow bodies of water. A swamp generally has a large number of hammocks, or dry-land protrusions, covered by aquatic vegetation, or vegetation that tolerates periodical inundation. The two main types of swamp are "true" or swamp...
in central Taiwan was transformed into a huge dam
Dam
A dam is a barrier that impounds water or underground streams. Dams generally serve the primary purpose of retaining water, while other structures such as floodgates or levees are used to manage or prevent water flow into specific land regions. Hydropower and pumped-storage hydroelectricity are...
in order to build a hydraulic power plant for industrialization. The dam and its surrounding area, widely known as Sun Moon Lake
Sun Moon Lake
Sun Moon Lake is the largest body of water in Taiwan as well as a tourist attraction. Situated in Yuchi, Nantou, the area around the Sun Moon Lake is home to the Thao tribe, one of aboriginal tribes in Taiwan. Sun Moon Lake surrounds a tiny island called Lalu...
(Nichigetsutan) today, has become a must-see for foreign tourist
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
s visiting Taiwan.
Although the main focus of each of these periods differed, the primary goal throughout the entire time was increasing Taiwan's productivity
Productivity
Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average, expressing the total output divided by the total input...
to satisfy demand within Japan, a goal which was successfully achieved. As part of this process, new ideas, concepts, and values were introduced to the Taiwanese; also, several public works projects, such as railways, public education
Public education
State schools, also known in the United States and Canada as public schools,In much of the Commonwealth, including Australia, New Zealand, South Africa, and the United Kingdom, the terms 'public education', 'public school' and 'independent school' are used for private schools, that is, schools...
, and telecommunication
Telecommunication
Telecommunication is the transmission of information over significant distances to communicate. In earlier times, telecommunications involved the use of visual signals, such as beacons, smoke signals, semaphore telegraphs, signal flags, and optical heliographs, or audio messages via coded...
s, were implemented. As the economy grew, society stabilized, politics was gradually liberalized, and popular support for the colonial government began to increase. Taiwan thus served as a showcase for Japan's propaganda on the colonial efforts throughout Asia, as displayed during the 1935 Taiwan Exposition.
Modern history
After the KuomintangKuomintang
The Kuomintang of China , sometimes romanized as Guomindang via the Pinyin transcription system or GMD for short, and translated as the Chinese Nationalist Party is a founding and ruling political party of the Republic of China . Its guiding ideology is the Three Principles of the People, espoused...
retreat to Taiwan, the Taiwanese society was relatively stable politically in the 1950s. However, it faced some obstacles economically as a result of the mass destruction during World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
and the Chinese hyperinflation
Hyperinflation
In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
in the 1940s. The sudden increase in population caused by the Kuomintang migration from mainland China
Mainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...
also affected Taiwan's economy.
Facing the economic pressure, the Kuomintang regime established several economic plans and policies. Of primary importance for the long-run growth of this economy was the commitment to education, beginning with universal elementary education, expanded to upper level schooling as basic levels of literacy were attained. The New Taiwan dollar
New Taiwan dollar
The New Taiwan dollar , or simply Taiwan dollar, is the official currency of the Taiwan Area of the Republic of China since 1949, when it replaced the Old Taiwan dollar...
s were issued to replace the Old Taiwan dollar
Old Taiwan dollar
The Old Taiwan dollar , sometimes called Old Taiwan yuan, was the currency of Taiwan, Republic of China from 1946 to 1949. It was issued by the Bank of Taiwan.-History:...
s. Successful land reform also took place, enabled by the KMT's interesting role as recent immigrants, and not vested landowners. In addition, the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
aid also helped the reformation of Taiwan's economy.
Import substitution
Import substitution industrialization or "Import-substituting Industrialization" is a trade and economic policy that advocates replacing imports with domestic production. It is based on the premise that a country should attempt to reduce its foreign dependency through the local production of...
policy, taking what was obtained by agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
to give support to the industrial
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
sector, trading agricultural product exports for foreign currency to import industrial machinery, thus developing the industrial sector. The government raised tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
s, controlled foreign exchange and restricted imports in order to protect domestic industry. By the 1960s, Taiwan's import exchange industry was faced with the problem of saturating the domestic market. At the same time, the factories of some industrialized nations, because of rising wages and other reasons, slowly moved to certain areas that had both basic industry and low labor costs. By slow steps, the economic policy of Taiwan changed to pursue export expansion
Export-oriented industrialization
Export-oriented Industrialization sometimes called export substitution industrialization or export led industrialization is a trade and economic policy aiming to speed up the industrialization process of a country by exporting goods for which the nation has a comparative advantage...
under advice of academic economists such as Ta-Chung Liu and Sho-Chieh Tsiang
Sho-Chieh Tsiang
Sho-Chieh Tsiang is a Chinese-American economist. He was born in China but resided primarily in the United States from 1949 until his death. He also resided in Taiwan in 1948 and in the 1980s.-Biography:...
of Cornell University
Cornell University
Cornell University is an Ivy League university located in Ithaca, New York, United States. It is a private land-grant university, receiving annual funding from the State of New York for certain educational missions...
. They also promoted allowing interest rates to rise, to encourage domestic savings and expand the amount of resources available to fund new businesses. Additional academic advisers also members of Academic Sinica provided sound advice encouraging innovation in agricultural techniques, enabling one of the few successful takeoffs toward modern growth based on agricultural investment in cash crops for export.
A major turning point in Taiwan's economy was during the 1970s. The expulsion of the Republic of China
Republic of China
The Republic of China , commonly known as Taiwan , is a unitary sovereign state located in East Asia. Originally based in mainland China, the Republic of China currently governs the island of Taiwan , which forms over 99% of its current territory, as well as Penghu, Kinmen, Matsu and other minor...
(Taiwan) from the United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
in 1971, the 1973 oil crisis
1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...
, and the switching of American diplomatic relations heavily affected the economy of Taiwan. But executive premier Chiang Ching-kuo
Chiang Ching-kuo
Chiang Ching-kuo , Kuomintang politician and leader, was the son of President Chiang Kai-shek and held numerous posts in the government of the Republic of China...
's Ten Major Construction Projects
Ten Major Construction Projects
The Ten Major Construction Projects were national infrastructure projects during the 1970s in Taiwan. The government believed the state lacked key utilities such as highways, seaports, airports, and power plants. Moreover, Taiwan was experiencing significant effects from the 1973 oil crisis...
served as the basis for heavy industrial
Heavy industry
Heavy industry does not have a single fixed meaning as compared to light industry. It can mean production of products which are either heavy in weight or in the processes leading to their production. In general, it is a popular term used within the name of many Japanese and Korean firms, meaning...
development in Taiwan.
After the 1980s, Taiwan's economy began to stabilize. It eventually became one of the Four Asian Tigers as a dynamic capitalist economy. The 1997 Asian Financial Crisis did not affect Taiwan nearly as harshly due to greater restrictions on the outflow of invested foreign capital than were in place in countries hurt by rapid capital flight. The Chen Shui-bian
Chen Shui-bian
Chen Shui-bian is a former Taiwanese politician who was the 10th and 11th-term President of the Republic of China from 2000 to 2008. Chen, whose Democratic Progressive Party has traditionally been supportive of Taiwan independence, ended more than fifty years of Kuomintang rule in Taiwan...
administration in the 2000s focused on joining international organization
International organization
An intergovernmental organization, sometimes rendered as an international governmental organization and both abbreviated as IGO, is an organization composed primarily of sovereign states , or of other intergovernmental organizations...
s. Taiwan was able to join the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
in 2002.
See also
- Economic historyEconomic historyEconomic history is the study of economies or economic phenomena in the past. Analysis in economic history is undertaken using a combination of historical methods, statistical methods and by applying economic theory to historical situations and institutions...
- Economy of TaiwanEconomy of TaiwanTaiwan has a developed capitalist economy that ranks as the 19th largest in the world by Purchasing power parity and 24th in nominal GDP of investment and foreign trade by the Republic of China government which governs Taiwan. In keeping with this trend, most large government-owned banks and...
- History of TaiwanHistory of TaiwanTaiwan was first populated by Negrito, and then Austronesian people. It was colonized by the Dutch in the 17th century, followed by an influx of Han Chinese including Hakka immigrants from areas of Fujian and Guangdong of mainland China, across the Taiwan Strait...
- Taiwan Land Reform MuseumTaiwan Land Reform MuseumThe Taiwan Land Reform Museum is a museum located in Taipei, Taiwan. It was established on March 11, 1967. The purpose of the museum is to commemorate Taiwan's land reform.-Land reform in Taiwan:...