America was clearly dominant in terms of the volume of economic investment in Cold War Taiwan.
From 1951 to 1985, 43% of “non overseas Chinese” investment came from the United States, 28% from Japan, 13% from Europe, and 16% from other countries. In fact, the island was a “battleground of intense competition between US and Japanese industry.” According to Walden Bello and Stephanie Rosenfeld in their book, Dragons in Distress: Asia’s Miracle Economies in Crisis
To offset the flood of cheap Japanese imports, particularly in electronics, to the U.S. market, many U.S. firms relocated their assembly operations to Taiwan and other third world countries . . . As quotas were placed on Japanese imports and U.S. firms threatened to gain a competitive edge by relocating to Taiwan, Japanese firms sought to regain advantage by moving their own assembly operations to Taiwan . . . The Japanese government encouraged the migration, in line with its policy of moving polluting, labor-intensive, and low-technology firms overseas and reserving the home islands for high-tech, higher-value-added industries. Thus Taiwan ‘functioned as a receptacle for declining Japanese industries in Japan’s global strategy to restructure its industry.
American investors on Taiwan were generally large transnational corporations.
American investors on Taiwan were generally large transnational corporations which set up wholly owned subsidiaries to cut costs on goods targeted at the US market.
These large firms, sometimes through joint ventures and licensing agreements, had visions of penetrating Taiwan’s domestic market as well as of exporting to the US and other countries.
Taipei also provided for the needs of the foreign diplomatic community and the American military.
At first, the US group included resident military and civilian advisers and their families. By the mid-1960s, however, the group expanded to include soldiers on rest and recreation from Vietnam.
Subsequent export expansion on the island is well documented.
In the early 1960s, transnational corporations were of two sorts.
In the early 1960s, transnational corporations were of two sorts, those that were manufacturing enterprises and those that were buying groups. Both played a large role in Taipei’s economic development.
Manufacturing enterprises were involved in the process of production as well as exportation, including the marketing of goods abroad. While the complete production process was sometimes located in underdeveloped countries, another model centered only on the production of components or assembly operations. This form was dominant in Taipei’s case.
In contrast, international buying groups left production to domestic entrepreneurs or firms but made purchases from them on a contractual basis, later selling the goods they purchased to overseas markets. These domestic entrepreneurs were in the vanguard.
Small and medium sized businesses (SMEs) became central to Taipei’s continued economic growth.
These domestic entrepreneurs were in the vanguard, establishing small and medium sized businesses (SMEs) that became central to Taipei’s continued economic growth.The entrepreneurs themselves were Taiwanese rather than Mainlanders and they later became active in politics, funding and supporting the move toward democratization in the 1980s.
For more information on Taiwan’s economic development, check out our earlier posts:
