Reasons for the formation of an export-oriented economy in Taiwan

Prior to 49 years there is really nothing to say, 1895 to 1945 Taiwan under Japanese colonization, 45-49 years which people have someone to take into account Taiwan, the development of Taiwan, the country **** wars have been fought inexpensively the main stage of development is still in the 1949 after the following period of Taiwan's development and the reasons for the development of Taiwan up 1. Since 1949, Taiwan's economic development has roughly gone through four periods: (1) The period of economic recovery (1949-1952). At that time, Taiwan's population increased dramatically, prices soared, industrial and agricultural production almost came to a standstill, while military expenditures accounted for more than half of the fiscal expenditures, making life difficult for the people and bringing the economy to the brink of collapse. In response, the Taiwan authorities adopted a series of policies and measures aimed at stabilizing society and restoring the economy, including land reform, reform of the currency system, foreign exchange trade control, and prioritizing the development of the electric power, fertilizer, and textile industries, etc. In the 1950s, Taiwan's agricultural sector developed rapidly, with an average annual growth rate of 4.7% each. In addition, from the second half of 1950, the United States began to implement economic assistance to Taiwan, injecting large amounts of money to help Taiwan recover its economy. By 1952, Taiwan's economy had basically recovered to its highest level before World War II. (ii) The period of agricultural development (1952-1960). At that time, Taiwan's economy was basically based on agriculture, with a surplus of labor, serious deficits in both foreign trade and the balance of payments, an extreme shortage of foreign exchange, and an inability of the public to consume imported industrial goods due to low incomes. With the guiding principle of seeking development through stabilization, the Taiwan authorities established the policy of fostering industry through agriculture and developing agriculture through industry. The land reform promoted the improvement of agricultural labor productivity, and agricultural products and their processed products accounted for a very high proportion of total exports, as high as 71.5% in 1957, becoming the main force of foreign exchange earnings. The Taiwanese authorities, in turn, captured profits by means of unequal exchanges, such as fertilizer for grain and compulsory purchases, and transferred it to the industrial sector. In the industrial sector, the center of gravity was placed on livelihood industries that did not require much capital, did not have high technological requirements, and had a short lead time for building factories, so as to replace imports with on-island production in order to adapt to the island's level of consumption and to save foreign exchange expenditures, create more jobs, and alleviate the pressure on employment. Agricultural and sideline product processing industries such as sugar, tea, pineapple and lemongrass oil have been formed, as well as import-substitution industries such as cement, glass, wood products, paper making, fertilizers, textiles, cooking oil, flour, plastic raw materials and products, man-made fibers, bicycles, sewing machines and household appliances. (III) The period of export-oriented economic development (1960-mid-1986). Due to the small size of Taiwan's market, the market for the products of the import-substitution industries was already saturated at that time, and continued development would lead to a lack of economic strength. Taiwan seized the opportunity of changes in the international division of labor at the time to take advantage of the international comparative advantage of low wages to vigorously develop the processing and export industries to drive economic development, and successively amended or formulated policies and measures aimed at promoting exports, such as reforming foreign exchange trade, implementing the "Regulations on Incentives for Investment," encouraging private savings, offering tax and financing incentives to export manufacturers, and establishing export processing zones and bonded warehouses. During this period, foreign investment played an important role in Taiwan's industrialization and export expansion, and private enterprises shifted from import substitution to export industries, becoming the main force of economic growth. Taiwanese enterprises imported production materials from Japan and exported industrial goods to the United States, creating a triangular trade relationship that depended on Japan for production and the United States for markets. Taiwan's industry developed at a rapid pace. From 1963 to 1973, the average annual growth rate of industry was as high as 18.3%, of which the average annual growth rate of manufacturing industry reached 20.1%, the proportion of industrial output value in Taiwan's GDP increased from 26.9% in 196O to 43.8% in 1973; the proportion of industrial products in the value of export trade increased from 32.3% in l960 to 84.6% in l973. By this time, Taiwan's industry had established an industrial pillar based on export processing zones, with processing industries such as light textiles and home appliances as the core, thus leading to the development of the economy. (iv) The period of economic transformation (l986 to the present). Since the 1980s, due to changes in Taiwan's internal and external economic environment, the NT dollar appreciated sharply against the U.S. dollar, wages also rose sharply, there was a shortage of labor, and the labor-intensive processing and export industries gradually lost their comparative interests and comparative advantages, leading to a low willingness to invest in the private sector, and the economy was in a predicament. For this reason, the Taiwan authorities in 1986 proposed the implementation of liberalization, internationalization, institutionalization of economic transformation, to further improve and perfect the market economy mechanism, and industrial upgrading and expanding foreign trade markets outside the U.S. as a major adjustment to determine the communications, information, consumer electronics, semiconductors, precision instruments and automation, aerospace, advanced materials, special chemicals and pharmaceuticals, health care and pollution prevention and so on. Ten emerging industries have been identified as the pillar industries. After nearly 10 years of economic transformation, Taiwan's economy has made some progress in liberalization and internationalization, and industrial upgrading has begun to bear fruit, with capital- and technology-intensive industries accounting for 61.5% of the manufacturing industry, among which the information industry has developed particularly prominently, and its output value has been ranked among the world's top. The center of gravity of Taiwan's foreign export market has also gradually shifted from Europe and the United States to Asia, with the proportion of exports to the United States dropping from 48.8% in 1984 to 23.7% in 1995, and the proportion of exports to Asia rising from 32.8% in 1998 to 52.6% in 1995. The structure of export products has also changed considerably, with electronics, information, machinery, electrical machinery and means of transportation accounting for more than 50 per cent of total exports. Outward investment grew substantially and began to become a net capital-exporting region, accumulating to about US$30 billion in outward investment by mid-1995. During this period, Taiwan's economic ties with the motherland and Hong Kong also became increasingly close. The reasons for Taiwan's faster economic development can be summarized as follows: (a) It benefited from the large amount of U.S. economic assistance and the development of the post-war capitalist world economy. From its own strategic interests, the U.S. gave Taiwan economic aid*** amounting to US$1.5 billion from 1950 to 1965. during the 15-year period, "U.S. aid accounted for an average of about 34% of Taiwan's gross investment, thus compensating for 91% of Taiwan's merchandise and labor manpower excess". U.S. economic assistance to Taiwan is not limited to funds or materials, but also includes military assistance, low-interest loans, direct investment, technology transfer, and personnel support. The role of USAID in the process of Taiwan's economic development is not trivial. According to Taiwanese scholars, without USAID, "Taiwan's economy would have lagged behind by at least 20-3O years". In addition, the post-war economic boom in the West in the 1960s and 1970s provided a huge market for Taiwan to develop an export-oriented economy. (ii) The property and talents brought from the motherland played an unnegligible role. When the ruling group of the Kuomintang was defeated and retreated from Taiwan, it transported 800,000 taels of gold from Shanghai as well as a large number of silver dollars and U.S. banknotes to Taiwan, transferred 2 billion U.S. dollars to American banks such as Citibank and Volkswagen by the Kung and Sung families, and brought a large number of various types of financial and economic talents with it. These funds and talents played an important role in the development of Taiwan's economy. In addition, the Kuomintang ruling group shipped a large amount of machinery and equipment to Taiwan. (c) The people of Taiwan have made important contributions to economic development. The people of Taiwan are diligent, thrifty, hard-working, and have made important contributions to Taiwan's efforts in raising the savings rate to gather capital and in developing international markets. Farmers have made sacrifices in the process of industrialization, and small and medium-sized entrepreneurs have become the main players in the export trade. (d) The Taiwan authorities have formulated economic policies such as seeking development in the midst of stability. For example, the development strategy of developing agriculture and labor-intensive industries before capital- and technology-intensive industries; developing import-substituting industries before export-oriented industries, has better combined Taiwan's actual situation and effectively taken advantage of the opportunities arising from changes in the international economic environment. (e) The development of cross-Strait economic and trade relations has had a significant impact on Taiwan's economic development. Over the past decade or so, cross-Strait economic exchanges and cooperation have taken on a certain scale, and a complementary and mutually beneficial situation is taking shape, with the Motherland becoming the hinterland for Taiwan's economic development. Taiwan's huge annual surplus from cross-Strait trade has ensured the balance of its trade balance and increased its investment capacity on the island. A large number of Taiwan's labor-intensive enterprises have invested in the mainland, easing their difficulties in developing on the island and facilitating the transformation and upgrading of Taiwan's industries, especially the growth of high-tech industries. The rising share of the motherland in Taiwan's export share has reduced Taiwan's excessive dependence on the U.S. market for its foreign trade, and has also played an important role in stabilizing Taiwan's economy. Although Taiwan's economy has a high GDP per capita, it is characterized by a narrow domestic market, few natural resources, and a weak scientific and technological base, which has led to the formation of a "shallow-dish economy". This feature is mainly manifested in the high degree of dependence on overseas markets and technology; in 1980, Taiwan's economic development dependence on foreign trade was as high as 95.6%, of which the dependence on export trade also amounted to 47.89%; in 1995, the degree of dependence declined, but it was still as high as 81.65%, of which the dependence on export trade was still 42.36%. In recent years, although Taiwan's industrial upgrading has achieved certain results, but the key technology is still high dependence on foreign countries, such as integrated circuit chip production has jumped to the forefront of the world, but the circuit design of this key technology is still mainly dependent on developed countries. Therefore, although Taiwan's industrial upgrading has made progress, there has been no breakthrough in overall industrial technology, and the basic pattern of weak capacity for independent development of industrial technology remains unchanged. Taiwan's economy has a high degree of external dependence and is subject to the influence and constraints of the external environment. In recent years, Taiwan's economy has been able to maintain moderate growth, and the effects of new market development and trade creation have been greater than those of technology creation. For a long time, Taiwan's financial situation has been poor, the tax base has shrunk, and the annual growth rate of tax revenue has declined from 19.7% in 1992 to -6.7% in 2001. At the same time, the expenditures of all levels of public treasury and "national treasury" grew rapidly, and in the structure of expenditures, armament expenditures accounted for a large portion of the fiscal budget, for example, in the fiscal budget of 1996, the "national defense expenditures" (excluding the special budget for the purchase of armaments) accounted for 22.1%; if administrative expenditures were also taken into account, the proportion of unproductive expenditures in the overall fiscal expenditures was very large. The fiscal situation has continued to deteriorate, and by 2002, the total debt of the Taiwan authorities was close to NT$4 trillion, with the debt balance accounting for more than 30 percent of GDP. Taiwan's economic development has also been affected by the island's intense internal political disputes and the instability of cross-strait relations. In recent years, political party disputes in Taiwan have been unusually intense and frequent, greatly affecting the formulation and implementation of relevant policies and regulations, and becoming one of the reasons for administrative inefficiency; this, coupled with rampant "black money politics", has negatively affected the progress and quality of many major projects. At the same time, the unstable cross-strait relations caused by the secessionist policy of the Taiwan authorities have affected the willingness of Taiwan's private capital and foreign capital to invest in Taiwan. To summarize, the major problems facing Taiwan's economy are all deep-rooted political and economic structural problems. Although the Taiwan authorities have taken certain corresponding measures, some of which have been helpful, it is difficult to solve the problems at root

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