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COLD WAR TAIWAN: GLOBAL FLOWS

December 3, 2013 by Lisa Reynolds Wolfe

Taiwan fabrics

As the various pieces of outward orientation fell into place in the 1960s, Taiwan’s economy entered a period of rapid and sustained expansion with exports constituting the main source of growth. No longer were flows unidirectional with Taipei only on the receiving end.

Between 1960 and 1977, manufacturing as a share of GDP rose from 22% to 37%. Taiwan rose from a rank of 12th among 55 middle income countries to a rank of first — equal with Argentina. A large part of the increase occurred in the 1960s.

Employment in agriculture fell from 56.1% of the total work force in 1960 to 37.2% in 1973, while industry’s share rose from 11.3% to 23% over the same period.

Trade once again became important, but now the proportion of manufactured exports far exceeded that of agricultural goods. Throughout this period, the unadjusted average GNP growth rate was 10% in 1976 prices. At the same time, consumer prices grew at a rate of less than 4% per annum. Gross savings as a percentage of GNP increased from 12.7% in 1960 to 34.6% in 1973.

Importantly, over this period of time, the escalating Vietnam War firmed up America’s commitment to contain communism.

This brought billions of greenbacks to East Asia. As Japan had fattened off the Korean War, so Taiwan’s economy received an incalculable boost from Vietnam’s agony. American purchase of agricultural and industrial commodities, use of military facilities and depots for repair of equipment, designation of Taiwan as a destination for rest and recreation, contract work for and in Vietnam, etc., pumped vast amounts of foreign currency into the Taiwan economy.

The Vietnam War led to US procurement of iron and steel manufactures, cement, textiles, and chemicals from Taiwan.

Spending by American servicemen on rest and recreation from areas of engagement reached an estimated $1,000,000 per year by mid-1967 as 5,000 troops per month spent their period of leave on Taiwan, attracted by the availability of hotel facilities.

Taiwanese exports to Vietnam/Cambodia/Laos increased from 2.3% of all the nation’s exports in 1960 to 15.8% in 1965.

Over the decade of the 1960s, the three influences discussed above — American instigated economic reform, the arrival of the transnational corporation, and the economic benefits of the Vietnam War — interacted to alter the character of Taipei’s districts. A closer look at the city on the neighborhood level will give us a concrete idea of the changes. We’ll look at residential transformation the next time we post on Taiwan.

For more information on Taiwan’s economic development, check out our earlier posts:

 Cold War Taiwan: Small and Medium-Sized Enterprises (SMEs)

Taiwan’s Electronic Industry

Transnational Corporations in Cold War Taiwan

US Investment in Cold War Taiwan

Economy in Taiwan 1959-1979

Economy in Taiwan 1959-1979 (Part II)

Filed Under: Taiwan

About Lisa Reynolds Wolfe

Widely published, Lisa holds a Ph.D. in Politics from New York University and a Master of Science in Policy Analysis and Public Management from the State University of New York at Stony Brook. Areas of particular interest and expertise include Cold War Studies, sustainable development, heritage, and the environment.

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A Cold War historian, Lisa holds a Ph.D. in Politics from New York University and a MS in Policy Analysis and Public Management from SUNY Stony Brook.

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