Taiwan is generally adjudged to have been the most successful of the East Asian Newly Industrialising Countries, if not of all post-war developing economies. Maintaining a GNP growth rate of 8-9 per cent from the 1950s through to the 1980s, its economic structure and standard of living were transformed within the space of thirty years. From being a ‘typical’ less-developed country, heavily agricultural and dependent on primary-product exports in the 1950s, it had become by the 1980s a major industrial exporter with an income per capita equivalent to that found in the lower ranks of developed countries. Nonetheless, it maintained a remarkable level of macroeconomic stability: inflation remained under control throughout; apart from brief periods around the two oil crises, growth continued without recession, and instead of foreign debts, Taiwan accumulated one of the world’s biggest foreign exchange reserves. Meanwhile, however, its income distribution remained one of the most equal in the world, improvements in life expectancy and literacy were greater than in any other country except Hong Kong, and it outperformed almost all industrialising countries in terms of ‘quality of life’ indices. 1 At each stage of its development, it proved to be several years ahead of Korea and did not suffer the same fluctuations and crises as accompanied Korean industrialisation.
For many analysts, therefore, Taiwan represents the ideal model of development. If it did not perform quite so well as regards progress towards democratisation, this could perhaps be excused by reference to its peculiar political status in the world and the security problems to which this gave rise. In everything else, it proved that, contrary to the predictions of dependency theory and much of the development thinking of the 1960s and 1970s, industrialisation could be achieved through increasing involvement in the world economy and without growing inequality and dualism. The question was of course how, and, as with the other successful East Asian industrialisers, the debate centred on the scale, nature and significance of state intervention in the economy. For some, Taiwan’s case demonstrated