The Economic Miracle : Taiwan's Economic Progress Is Equaled by Its Political Transformation from an Authoritarian Government to a Democracy of Competing Political Parties and Citizens Enjoying Full Freedoms and Civil Rights

Article excerpt

On January 5, 1950, President Truman declared that "the U.S. government will not provide military aid or advice to Chinese forces on Formosa," in effect handing Taiwan over to the Chinese communist forces massing in Fujian Province for the takeover of the island, thus ending a civil war and unifying China. Kuomintang (KMT) cadres were telling their people that, if they did not defend the island, "their only hope was to jump into the sea." But the course of history radically changed on June 27, 1950, when the United States intervened once again in China's civil war by dispatching its Seventh Fleet to the Taiwan Strait to prevent the regimes from attacking each other.

In 2000, circumstances in Taiwan bear little resemblance to those existing in 1950. Per capita income has shot up from U.S. $100 to more than $13,000. The defense burden is about 6 percent of GDP, down from 12 percent in 1950. Taiwan's population was only 9 million in 1950, including around 3 million mainlanders; it now numbers more than 22 million. In 1950 around 35 percent of the people lived in the countryside and depended on agriculture and fishing; today the population is mostly urban, with agriculture contributing less than 3 percent of GDP. Services now generate a higher fraction of GDP than manufacturing does. Forty years ago, Taiwan's exports were less than 8 percent of GDP; they now make up roughly 50 percent.

The island's stunning economic progress is equaled by its remarkable political transformation from an authoritarian government ruled by a single party (the Kuomintang) to a democracy of competing political parties. National and local leaders are elected, and citizens enjoy their full freedoms and civil rights. The limited freedom and civil rights violations of the 1950s are no more.

Civil society has also changed. In 1950 family lineages, a few Christian denominations, and a minuscule number of private associations constituted a civil society. In 2000, a panoply of groups--writers and artists, professionals, and interest groups--and associations focusing on such issues as the environment, human rights, and women's rights represent the diverse aspects of an advanced democratic society.

These transformations came in two breakthrough periods that produced a third phase with new challenges. Three Taiwan presidents, the key agents for change, made these remarkable developments possible.

Three breakthrough phases

Between 1950 and 1965, with nearly a million troops to support, rampant inflation, and one out of four persons unemployed, the island's economy could never have grown without the infusion of American military and economic aid to the tune of U.S. $1.5 billion. This watershed period laid solid foundations for the island's subsequent modernization.

Beginning in 1950, the ROC government initiated elections for village leaders, 21 district magistrates and councils, and Taiwan's provincial assembly. To be sure, the KMT tightly controlled these elections, but the experiment in limited democracy bore fruit in the late 1960s and early '70s when some opposition politicians ran in and even won elections.

Economic reforms broke the back of inflation, redistributed rural property rights, and redirected more production to exports. As a consequence, an export boom that began in the early 1960s and continued thereafter created demand for manufacturing, employing villagers who preferred to live in cities.

The government subsidized primary education, later expanded to high school education. It also established technical and trade schools to expand the labor force for the manufacturing and construction sectors.

By 1965 Taiwan was independent of U.S. aid. Its market economy was becoming integrated with an expanding world economy, and its growing manufacturing sector was creating a huge rural migration to the cities. Citizens were electing local leaders, and families were educating their children, even sending them to North America and Japan for higher education. …