Geography Reference
In-Depth Information
hyperinflation and lack of control in the 1940s. Thus an isi policy was followed
during the 1950s, up to 1958-9, when the change towards a more outward-
oriented policy began. During the 1960s and 1970s, Taiwan achieved massive
growth rates in production, as
Table 8.1
demonstrates, shifting it out of the poor
countries group altogether. In agriculture, Taiwan benefited from agrarian
reform between 1949 and 1953, underwritten by the USA, building up a
relatively prosperous small-farm economy. First the excessive rents were
reduced to a reasonable level, then security of tenure was given to tenants.
Finally, landlords with tenants were generally replaced with owner-operator
farmers, and co-operatives were formed to help these farmers market their goods
(Reitsma & Kleinpenning 1985:360-87). Development after the Japanese
departure thus benefited from a good physical and human infrastructure built up
during the early part of the century, and an energy which was released once
social inequalities were overcome. Most writers have emphasized the beneficial
role of an agriculture that was productive and able to help in savings during the
transition to an industrial society. What was more important was probably the
social transformation achieved through elimination of the large-scale landlords.
As elsewhere, the development process was multifaceted, with an increase in
savings rates from under 10 per cent in 1955 to 30 per cent in 1980. There was
an equalization of incomes between social groups, from an excessive ratio
between the top and bottom 10 per cent strata of income of 20:1 in 1953, to 4:1
in 1980. Without regional data, we cannot be sure that this also implies an
interregional convergence, but this is a likely situation. Demographic transition
was also achieved, with a 4.0 per cent birth-rate up to 1950, typical of LDCS,
reducing to under 2.0 per cent by 1984, and a population growth rate of 1.5 per
cent in this latter year.
Government intervention
As in South Korea, industrial development was a key feature in the overall
economic development of Taiwan, and this was very largely by the private
sector. In China there had been a strong tradition of state interference in the
economy, and this was taken to Taiwan, where 48 per cent of basic industry was
publicly owned in 1960 (Myers 1990:43), but by 1981 this had become about 80
per cent private. During the 1980s the public sector has been reduced still further
(Ranis 1995). Government intervention was always significant, but it is important
to understand that this was not in the face of, or against, the private sector, but in
support of it, including foreign firms in some selected sectors that were allowed
to remit profits to home countries. Economic planning was formalized through
national plans of five to ten years in length, specifying which industries were to
be favoured (Selya 1993). In addition, the government invested in major projects
such as roads and railways, ports and power plants, concentrating its resources
heavily in different time periods. Evidently this kind of policy, like that of South
Korea, does not correspond to a liberal view on development. On the other hand,
