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Taiwan Miracle
The Taiwan Miracle (Chinese: 臺灣奇蹟; Tongyong Pinyin: Táiwān Cíjī; Tâi-lô: Tâi-uân Kî-Tsik) or Taiwan Economic Miracle refers to Taiwan's rapid economic development to a developed, high-income country during the latter half of the twentieth century.
As it developed alongside South Korea, Singapore, and Hong Kong, Taiwan became known as one of the "Four Asian Tigers". Taiwan was the first developing country to adopt an export-oriented trade strategy after World War II.
Premier Chen Cheng has been widely regarded as a leading architect of the Taiwan Miracle. He promoted and relied upon a cohort of technocrats, including Yin Chung-jung, Yen Chia-kan, Yang Chi-tseng, and Li Kwoh-ting , while remaining the ultimate decision-maker in economic policy. Yin was often considered the first chief technocrat, succeeded after his death by Yen, and later by Li and Sun Yun-suan.
After a period of hyperinflation in the late 1940s when the Kuomintang-led government of the Republic of China military regime of Chen Yi overprinted the Taiwanese dollar against the previous Taiwanese yen in the Japanese era, the government introduced a new and stable currency to address hyperinflation. Along with the $4 billion in financial aid and soft credit[citation needed] provided by the US (as well as the indirect economic stimulus of US food and military aid) over the 1945–1965 period, and a more direct infusion of $41 billion in free development aid up until year 1975 (now worth $242 billion in 2024 values as adjusted for inflation). Taiwan thus had the necessary capital to restart its economy.
A land reform law, inspired by the same one that the Americans were enacting in occupied Japan, removed the landlord class (similar to what happened in Japan), and created a higher number of peasants who, with the help of the state, increased the agricultural output dramatically. This marked the beginning of capital accumulation.[clarification needed] It inverted capital creation, and liberated the agricultural workforce to work in the urban sectors. However, the government imposed on the peasants an unequal exchange with the industrial economy, with credit and fertilizer controls and a non monetary exchange to trade agrarian products (machinery) for rice. With the control of the banks (at the time, being the property of the government), and import licenses, the state oriented the Taiwanese economy to import substitution industrialization, creating initial capitalism in a fully protected market.[citation needed]
It also, with the help of USAID, created a massive industrial infrastructure, communications, and developed the educational system. Several government bodies were created and four-year plans were also enacted. Between 1952 and 1982, economic growth was on average 8.7%, and between 1983 and 1986 at 6.9%. The gross national product grew by 360% between 1965 and 1986. The percentage of global exports was over 2% in 1986, over other recently industrialized countries, and the global industrial production output grew a further 680% between 1965 and 1986. The social gap between the rich and the poor fell (Gini: 0.558 in 1953, 0.303 in 1980), even lower than some Western European countries, but it grew a little in the 80's. Health care, education, and quality of life also improved.
The economist S. C. Tsiang played an influential role in shifting towards an export-oriented trade strategy. In 1954, he called for Taiwan to deal with its chronic shortage of foreign exchange by increasing exports rather than reduce imports. In 1958, the policymaker K. Y. Yin pushed for the adoption of Tsiang's ideas.
In 1959, a 19-point program of Economic and Financial Reform, liberalized market controls, stimulated exports and designed a strategy to attract foreign companies and foreign capital. An exports processing area was created in Kaohsiung and in 1964, General Instruments pioneered in externalizing electronic assembly in Taiwan. Japanese companies moved in, reaping the benefits of low salaries, the lack of environmental laws and controls, a well-educated and capable workforce, and the support of the government.[citation needed] But the nucleus of the industrial structure was national, and it was composed by a large number of small and medium-sized enterprises, created within families with the family savings, and savings cooperatives nets called hui (Chinese: 會; pinyin: Huì; Pe̍h-ōe-jī: Hōe; Pha̍k-fa-sṳ: Fi). They had the support of the government in the form of subsidies and credits loaned by the banks.[citation needed]
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Taiwan Miracle
The Taiwan Miracle (Chinese: 臺灣奇蹟; Tongyong Pinyin: Táiwān Cíjī; Tâi-lô: Tâi-uân Kî-Tsik) or Taiwan Economic Miracle refers to Taiwan's rapid economic development to a developed, high-income country during the latter half of the twentieth century.
As it developed alongside South Korea, Singapore, and Hong Kong, Taiwan became known as one of the "Four Asian Tigers". Taiwan was the first developing country to adopt an export-oriented trade strategy after World War II.
Premier Chen Cheng has been widely regarded as a leading architect of the Taiwan Miracle. He promoted and relied upon a cohort of technocrats, including Yin Chung-jung, Yen Chia-kan, Yang Chi-tseng, and Li Kwoh-ting , while remaining the ultimate decision-maker in economic policy. Yin was often considered the first chief technocrat, succeeded after his death by Yen, and later by Li and Sun Yun-suan.
After a period of hyperinflation in the late 1940s when the Kuomintang-led government of the Republic of China military regime of Chen Yi overprinted the Taiwanese dollar against the previous Taiwanese yen in the Japanese era, the government introduced a new and stable currency to address hyperinflation. Along with the $4 billion in financial aid and soft credit[citation needed] provided by the US (as well as the indirect economic stimulus of US food and military aid) over the 1945–1965 period, and a more direct infusion of $41 billion in free development aid up until year 1975 (now worth $242 billion in 2024 values as adjusted for inflation). Taiwan thus had the necessary capital to restart its economy.
A land reform law, inspired by the same one that the Americans were enacting in occupied Japan, removed the landlord class (similar to what happened in Japan), and created a higher number of peasants who, with the help of the state, increased the agricultural output dramatically. This marked the beginning of capital accumulation.[clarification needed] It inverted capital creation, and liberated the agricultural workforce to work in the urban sectors. However, the government imposed on the peasants an unequal exchange with the industrial economy, with credit and fertilizer controls and a non monetary exchange to trade agrarian products (machinery) for rice. With the control of the banks (at the time, being the property of the government), and import licenses, the state oriented the Taiwanese economy to import substitution industrialization, creating initial capitalism in a fully protected market.[citation needed]
It also, with the help of USAID, created a massive industrial infrastructure, communications, and developed the educational system. Several government bodies were created and four-year plans were also enacted. Between 1952 and 1982, economic growth was on average 8.7%, and between 1983 and 1986 at 6.9%. The gross national product grew by 360% between 1965 and 1986. The percentage of global exports was over 2% in 1986, over other recently industrialized countries, and the global industrial production output grew a further 680% between 1965 and 1986. The social gap between the rich and the poor fell (Gini: 0.558 in 1953, 0.303 in 1980), even lower than some Western European countries, but it grew a little in the 80's. Health care, education, and quality of life also improved.
The economist S. C. Tsiang played an influential role in shifting towards an export-oriented trade strategy. In 1954, he called for Taiwan to deal with its chronic shortage of foreign exchange by increasing exports rather than reduce imports. In 1958, the policymaker K. Y. Yin pushed for the adoption of Tsiang's ideas.
In 1959, a 19-point program of Economic and Financial Reform, liberalized market controls, stimulated exports and designed a strategy to attract foreign companies and foreign capital. An exports processing area was created in Kaohsiung and in 1964, General Instruments pioneered in externalizing electronic assembly in Taiwan. Japanese companies moved in, reaping the benefits of low salaries, the lack of environmental laws and controls, a well-educated and capable workforce, and the support of the government.[citation needed] But the nucleus of the industrial structure was national, and it was composed by a large number of small and medium-sized enterprises, created within families with the family savings, and savings cooperatives nets called hui (Chinese: 會; pinyin: Huì; Pe̍h-ōe-jī: Hōe; Pha̍k-fa-sṳ: Fi). They had the support of the government in the form of subsidies and credits loaned by the banks.[citation needed]