In 1966, industry was located mostly in Old Taipei where the districts of Tatong, Lungshan, Yengping and Shuangyuan contained 44.7% of all factories. Overall, the Old City locations had benefits (access to rail and road transportation along with availability of water, markets, and employees) which allowed them to retain their advantage and their large manufacturing base even though there were some shifts to new neighborhoods as a result of cheaper land. For example, industries which were a public nuisance owing to pollution — or which required large amounts of space — located in the new districts of Shihlin and Nankang. Sungshan and Tatong, though, had both the most diverse mixture of factories and the greatest number of companies in each type of manufacturing.

As with most older cities in China, there was not a complete separation of urban function, nor was there a separation of work and residence. Instead, like many cities in Asia, Taipei boasted an architectural form known as the shophouse.

Shophouses can be found throughout Asia, wherever there are Chinese shopkeepers. In Taipei, the main concentration was found along Chungshan North Road and in the area north and east of the central railroad station. During the 1970s,  this core was displaced by the development of new, more westernized shopping centers. Still, more space remained devoted to residences in downtown commercial areas of Taipei than western planners were comfortable with at the time. Because whole city blocks were usually not available for development, the city ended up with a combination of large, modern structures along a main street with a small enclave of traditional buildings squeezed between them.

The shophouse structure was set back from the street with some sort of work area on the ground floor and living quarters for the family in back. In some instances, the living quarters were above the work area, extending out over the sidewalk. Consequently, during the 1960s and 1970s, more traditional, informal economic and social services were found on almost every street corner in the city. Even with the advent of the multinational firm, most industry in Taipei remained small scale, and SMEs were solidly integrated into the urban fabric of the capital. Cheap public transportation and the absence of privately owned vehicles precluded the development of car oriented centers in the older areas of Taipei.

While influenced by the US in so many different aspects, concepts of western planning had little impact on Taipei’s industrial core.

The chief commonality between US cities and Taipei during the Cold War period seems to be the decline of population in the urban core and the growth of peripheral areas, leading to boundary expansion.

On the other hand, unlike American cities, wherever one traveled in the capital during the labor intensive period one encountered the military aspects of everyday life. According to Roger Mark Selya

. . . the Chinese militry permeated all of Taipei life. There were jeeps and military trucks on every road. Soldiers were everywhere. Some of them “guarded” buildings or important intersections. Many soldiers of all ranks just seemed to be doing daily, personal, household chores. Middle and high school students also looked like soldiers since their uniforms were the same style and color as the military. One newspaper cartoon had a middle school child sitting beside a general on a bus asking which high school the general attended. Security concerns also permeated civilian and business offices . . .

Militarism rather than Western concepts of urban design dictated the character of urban life. However, even though Cold War fears and opportunities had changed the face of Taipei, there were also other anxieties, particularly related to uneasiness over illegal workers, the informal sector, and heightening rural-urban migration.

By 1966, up to 39% of all factories in Taipei City were illegal, usually concentrated in the Old City. Most unauthorized business were traditional, not associated with the new business partnerships with the US. Four types of industry comprised the majority (60%). The industries most highly represented were basic metals (24%). machinery (12%), printing (15%), and wood (9%).

At the same time, as in other urban areas of the less developed world, there was a large informal sector. However, in Taipei, workers in the less formal sector received relatively high salaries compared to workers with similar positions in other fast-growing Third World nations. Moreover, in contrast with the more common pattern worldwide, Taipei’s informal sector was not dominated by migrants. Instead, due to the rich mix of public and private transportation made possible by US supported infrastructure projects in Taiwan, many of Taipei’s informal workers were commuters.

Geography Constrains Taipei’s Urban Growth

Because geographic barriers separate the east and west coasts of the island of Taiwan, urban expansion has been restricted to the western plains areas and the low hills around Taipei in the north of the country.

The capital itself has been limited in its potential growth because it is bounded on the north and east by volcanic mountains which have heights up to 1,000 meters, on the south by the northern foothills of the Central mountain range, and on the west by the Linkou terrace at a height of some 200 meters. The confluence of three rivers in the metropolitan area means that the city is periodically challenged with serious problems relating to flooding and slope control.

Because of these geographical constraints, a system of cities developed in the Western portion of the country.

Traditionally, two of the metropolitan areas, Taipei and Kaohshiung, represented major growth poles in the north and south respectively, while Taichung and Tainan, Taiwan’s third and fourth largest municipalities held the center.

Scattered around and between these four major cities were several smaller towns which represented subregional and manufacturing centers.

All urban regions were linked by a network of highways and railroads introduced during the period of Japanese occupation and extended considerably since that time.

Growth Poles or Urban Corridor?

While growth poles are one way to visualize Taiwan’s urban form, a revised — and more accurate approach — would be to conceptualize the western portion of the country as an urban corridor linking Keelung  and Taipei to Kaohshiung and Tainan in the south.

In the north of the country, the subregional centers blur into and are dominated by Taipei, forming part of the capital’s urban landscape. In fact, the city has spread its tentacles as far as spatially possible with urban and industrial expansion constrained  by the expense and scarcity of the land.

Government Policy

Aside from geography, government policy dictated that industry would be located in the countryside. Associated factors include:

• lower land prices
• an inexpensive and convenient transportation network
• accessibility to a surplus rural labor force.

Especially important was the government’s provision of low-cost or free industrial sites and infrastructure.

A policy decision to build a new airport in Taoyuan — within Taipei’s metropolitan area but at some distance outside of the city center — permitted a downscaling of Sungshan Airport in the north central part of the city.

The government’s policy of establishing export processing zones to promote exports also led to the dispersal of industry. This trend dominates the country’s labor intensive phase, starting with the founding of export processing zones in Kaohshiung in 1965 and in Nantze (outside Kaohshiung) and Taichung in 1969.

Between 1968 and 1981, the government (in conjunction with private corporations) established 62 new industrial zones in Taiwan. Only 10 of these were in one of the five largest cities. Twenty-two were in one of the four metropolitan counties surrounding these cities and 30 were in the remaining more rural counties. This directly reflects the success of AID and the KMT government in attracting multinational organizations.

Export processing zones were particularly attractive to foreign investors interested in forming joint enterprises. By 1972, they employed about 58,000 workers, most of whom were unskilled women whose pay was well below the average manufacturing wage in other parts of the country.

Migrants Flow Into Taipei  From the Countryside

Nevertheless, despite the success of policies encouraging industrial dispersal, Taipei did expand rapidly, particularly in the 1960s when a strong concentration of industry was established in the locales immediately surrounding the city. These districts attracted migrants from other areas of the country and were soon part of metropolitan Taipei.

So many new arrivals flowed into the capital that the World Bank estimates that during the 1950s and 1960s rural-urban migration accounted for over 40% of the city’s growth. And unlike the pattern in much of the less developed world, since most males were in the military, young women aged 20-25 dominated the migration stream.

Sixty percent of the newcomers were from rural areas of Taiwan hoping to find jobs in manufacturing and services. In general, they were more educated than their urban counterparts, and they moved quickly into  white-collar positions.

The migrants preferred the newer sections of the city, reinforcing the momentum toward decline which had already begun in the older districts of the capital (Lungshan, Kuting, Sungshan, and Ta-an). These areas experienced a ‘graying’ of their population, then gradually emptied while population in the newer districts multiplied.

After the early 1970s, the migration stream declined and, by 1978, 100% of the population growth in the capital could be attributed to natural increase.

Photograph by DaveWilsonPhotography .

Taipei’s districts added in 1968 experienced much higher growth in the postwar period that the older districts of Taipei. Peitou and Shilin in the northern part of the city expanded particularly rapidly during the 1960s, in part, as we have seen, because of the US presence. On the other hand, in the Original City Area, Chengshung, Chienching, Lungshan, and Yenping experienced losses beginning in the late 1950s and continuing until the early 1970s. At this time, Kuting, Shuangyuan, and Tatong also began to experience decline.

From the mid 1950s to the mid 1970s, Sungshan in the center of the city was the only one of the “old” districts to exhibit rapid increase. Most of Taipei’s energy during this period was tied to an expansion of the service sector linked to the surge of manufacturing firms. While much manufacturing came to be located outside of the capital, the city’s tertiary sector expanded markedly in response to industry’s need for support services.

Still, while service sector expansion and industrialization were accompanied by rapid urbanization, Taipei was able to avoid the uncontrolled population increase that resulted in widespread unemployment and more extensive squatter settlements in other less developed countries. This was due to 3 factors:

• constraints imposed by geography
• the relocation of the airport to an area 30 kilometers southwest of the city
• the establishment of export processing zones beginning in the mid 1960s.

Old Taipei

Mainlanders arriving in Taipei in 1949 became concentrated in residential areas of the city vacated by recently repatriated Japanese.

During the 1950s and 1960s, this group made up 81.6 % of the population in Chengchung, 80 % in Kuting and Ta-an, and 60.1 % of the population of Chungshan. These districts were located in Old Taipei in what is known as the Original City.

Some of the areas — Chengchung, for example — contained old government housing compounds which the newcomers were able to occupy due to their government positions.

While there was residential separation, there was some overlap as well since both mainlanders and the ‘local’ Chinese population lived side by side in the districts of Old Taipei known as Sungshan and Ta-an. Later, when Taipei’s economic miracle unfolded, the local population prospered more quickly than the mainlanders and moved to more modern and affluent suburbs. Many in this group were entrepreneurs engaged in small and medium-sized businesses linked to the American multinational firm and the international economy.

Newer Neighborhoods

By 1973, 73 % of those who had moved to the newer neighborhoods of Taipei were ‘native’ Taiwanese. These individuals were, of course, the entrepreneurs who benefited from the success of their SMEs. (Read more about SMEs here.) Their relocation resulted in increased ethnic segmentation, and Taipei was to some extent a divided city. Housing emphasized the cultural, political, and social differences (and distances) between the mainlanders and Taipei locals.

The few remaining aborigines preferred the recently incorporated districts of Neihu and Nankang which had been added in 1968 when the city expanded its boundaries, adding six more districts or chu. Four of these recently annexed townships were transferred from Taipei County: Chingmei, Mucha, Nankang, and Neihu. The Yangmingshab Administrative District made up of Shihlin and Peitou also was incorporated into Taipei.

According to Roger Mark Selya in his book Taipei:

Over time, separate social/residential areas developed in the city:  agricultural (Shihlin); rural-low economic status (northern and southern periphery of the city); urban-low economic status (Mengchia, Shuangyuan, and Tatong); mixed, single adults (old business and government core with shophouses and peripheral areas); middle class, and upper class (Ta-tao-chen, Chungshan North Road).”

Part of Chungshan North Road’s attraction was its proximity to the US Commissary and Officers’ Club.

The American Presence

American diplomats, military, and AID personnel tended to live in the recently incorporated districts of Peitou and Shihlin since more modern housing was available there. Also, the Taipei American School was located in Shihlin. Other US government personnel tended to locate near their place of work or near other US installations which were pick-up stops for government bus routes.

An American scholar who was a student in Taipei in 1969 paints a picture of US privilege in the city:

Before classes started . . . I discovered the two other U.S. expatriate communities, the military and businessmen. Neither group seemed interested in us students. They seemed too busy preserving their own privileges and perpetuating their own jealousies. However, since the Chinese drivers of the military buses could not tell the difference between one American and another, I was able to use the military bus system which was much less crowded than the public system. I also learned how to steal onto the military base and get an occasional U.S. meal. But as for PX privileges, I had to settle for stuffing my rage every time I saw an overpriced box of Kellogg’s cereal or Hunt’s tomato sauce in stores near where military personnel lived — evidence of an active black market.

Neighborhoods and activities linked to US servicemen fell into disarray when the US military ended its advisory mission. Even small businesses were affected.

For example, the number of actual bookstores declined, especially those with foreign and English titles which had been concentrated along Chungshan North Road opposite the Botanical Gardens and the Historical Museum. In the 1960s, influenced by the American presence, the area had been the most desirable place to go shopping. However, with the US departure, deterioration set in and the preferred shopping area shifted to the newer, eastern parts of the city and to the central and specialized shopping districts which could be found in each of the six districts added to the city in 1968.

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)

Guerilla Capitalism

During the 1950s, state-owned enterprises (SOEs) were so dominant that SMEs operated only at the margin. Their role was transformed in the 1960s when they began to serve as suppliers of multinational firms. Over time, as SMEs branched out, they became Taiwan’s engine of growth, dominating the export manufacturing sector. Agressive entrepreneurship, flexibility, and quick response to market changes led their operations to be characterized as “guerilla capitalism.” The ability to adapt quickly to market opportunities was sustained over time. For example, “one small manufacturing firm had nearly 3 million toy dinosaurs in US stores a week before the opening of Jurassic Park.

By 1998, approximately 80% of Taiwan’s labor force worked for SMEs with over 95% of Taiwan’s 930,000 registered companies falling into that category. SMEs accounted for half of the island’s aggregate export value.

All observers weren’t sold on SMEs, however.  In 1990, Robert Wade noted “that the 96% of firms with under 100 employees produce only about a quarter of manufacturing output and value added.”

SMEs Model the Family Firm

SMEs typically employed less than 200 regular workers, averaging 40-50 employees. They were organized on the model of the family firm. This meant that family and kinship networks

perform diverse functions and depend on highly personal ties of trust and reciprocity in which favors and assistance are mutually bestowed and received in local as well as broad spatial settings.

Frequently members of one family provided the total capital required for start-up.

The firms are still the preferred model in Taiwan with workers beginning their career as employees of large corporations but striking out on their own as soon as they have access to enough capital to start a business. It is estimated that they account for 97.4% of Taiwanese-owned firms.

The role of SMEs was much greater in the 1960s through the 1980s than that of Taipei’s largest conglomerates. In fact, they produced almost two-thirds of the nation’s exports during this period. This despite the fact that they were usually forced to obtain financing from the informal market where they often paid interest rates as high as 300%.

The dynamism of SMEs was due to their link to the international economy. While the national political scene was primarily reserved for mainlanders, the country’s economic resources came to be held largely by the Taiwanese. Eventually, however, the economic cleavage between this group and the KMT-connected economic elite became a political division as well. The entrepreneurs became active financial and political supporters of the emerging opposition Democratic Progressive Party, the DPP.

Photograph by Denise Chan.

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

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)

Taiwan’s entry into the global economy was facilitated by a relationship between the Nationalist military and the US.

Taiwan focused on direct exports, subcontracting, consignment work for foreign corporations, and joint ventures. These opportunities provided substantial employment opportunity in Taiwan where, by the mid 1960s, 150,000 additional jobs were needed each year to keep pace with population growth.

In 1966, 723 new factories were established in Taiwan by foreign private corporations, creating 30,000 new job openings annually, 20% of the annual deficit. Moreover, Taipei’s relatively large number of trained professional management and technical persons was a factor in attracting industry.

One corporate executive noted the large reservoir of local talent stating:

In Taiwan trained people work at lower levels than anywhere else. There were many trained engineers among the refugees from the mainland who were working as porters.

Most of the trained refugees had settled in Taipei. Consequently, few Americans were assigned as resident managers in Taipei and most jobs went to local residents, not American expatriates.

An in-depth look at the electronics industry will expand our understanding of the penetration of the local economy by the multinational firm and the associated impact on Taipei’s urban development.

The Electronics Industry

By 1968 the electrical and electronic goods industry was Taiwan’s second biggest exporter after textiles and by 1984 it overtook textiles. The two industries were quite different.

Unlike textiles, the electronics industry had no base in Taipei prior to the arrival of the multinational corporation in the 1960s. It was shaped by global forces from the very beginning. Most of its production was exported, chiefly to the United States. The industry was characterized by a few foreign-invested assemblers, most from the US, and many locally and privately owned suppliers of components to them. Thus, the industry was strongly associated with the emergence of SME’s (small and medium enterprises) which eventually became the core of Taipei’s export sector.

As previously mentioned, the electronics sector was targeted as desirable by the military which was deeply involved in efforts to solicit foreign investment, along with the assistance and advice of US AID. Their hard work brought in first General Instruments (1964) and then other companies which set up bonded export factories throughout the island.

Much of the US incentive came from a need to compete with the Japanese.

In 1953. a Taiwanese firm (Tatung) had signed the first ever technology agreement between a Taiwanese and a Japanese firm. The Japanese company agreed to take engineers from the Taiwan firm for training. The agreement was supported and even funded by US AID (formerly the Economic Cooperation Administration).

By the late 1950s, a number of Japanese firms began seeking local partners for electrical assembly in order to obtain lower labor costs. Seven joint ventures were formed by 1963.

In the next two years, 24 US firms entered into production agreements with the Taiwanese. In 1965, the first export-processing zone opened in Kaoshiung in the south of Taiwan. The bonded factories established by many US firms offered basically the same advantages — relatively unfettered conditions in return for exporting all their production. The object was to cut costs by getting the labor-intensive part of semi-conductor manufacturing — connecting the wire leads and packaging — done more cheaply than was possible at home.

By 1966, the Taiwanese government had decided to make Taiwan into an “electronics industry center.’

A Working Group for Planning and Development of the Electronics Industry was established to assist in marketing, coordinating production with the demands of foreign buyers,, procuring raw materials, training personnel, improving quality, and speeding up bureaucratic approval procedures.

In 1967 and 1968, major exhibitions were held to introduce local manufacturers and foreign investors to each other. The objective was to take what began in Taiwan as an enclave industry and use it to create an entirely new sector of parts and components makers and, eventually, assemblers of finished goods able to compete internationally. According to Thomas B. Gold:

The state was the contrapuntal partner to the market system, helping to insure that resources went into industries important for future growth and military strength — including import substitutes for use in export production, such as synthetic fibers and plastics, and new export sectors such as electronics. Multinational companies became important players in these developments, but only after the state had a well-established presence and leadership position from which it could channel their activities rather than be made subordinate to a logical of global profits.

The consumer electronics industry is a good example of a dynamic industry that the state helped initiate and guide, but otherwise did not invest in directly or tie to state enterprises. Transnational corporations (TNCs) performed this function. This is a significant departure from the state-led pattern of the 1950s and represents a clear commitment to the American promoted approach of granting increased scope for private capital, local and foreign.

In a related move, in 1965, the regime established a publicly owned China Data Processing Center to push the use of computers in local industry. In advanced electronics, public research organizations and public enterprise spinoffs were used to acquire and commercialize new technology, a strategy promoted by both the Taiwanese military and the US.

Taipei’s locally owned SMEs play an important role.

Electrical and electronics exports grew at a rate of 58% a year between 1966 and 1971. Foreign firms were quite important in this area.

By the 1970s, over half of foreign firms’ exports were in electronics and electrical appliances, with foreign firms accounting for 2/3 or more of total exports from this industry. It is important to note, though, that foreign-owned companies (more than 50% equity held by foreigners) were surprisingly small and in no way dominated the economy. In fact, they paved the way for a new cohort of entrepreneurs, mostly Taiwanese of petit bourgeois background.

To underscore, despite the contribution of the American multinational enterprise to the birth and success of export oriented industry in Taiwan, it is important to emphasize the significance of Taipei’s locally owned SMEs. They were an integral part of the drive toward expanded export capability, becoming more crucial over the course of the 1960s.

SMEs were the essence of the new middle class in Taipei which was to become a strong force in the move toward a democratization of politics in a city where the scale of business had a large influence on party affiliation and competition.

Most of the leaders of Taipei’s largest conglomerates had strong ties with the KMT, while heads of small and medium sized businesses tended to support the opposition. This is also consistent with splits along ethnic lines, for owners of SMEs tended to be native Taiwanese rather than mainlanders.

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

Transmantional Corporations in Cold War Taiwan

US Investment in Cold War Taiwan

Economy in Taiwan 1959-1979

Economy in Taiwan 1959-1979 (Part II)

Transnational corporations during the Cold War period concentrated on three categories of manufactured products from Taiwan and other less developed countries.

The first category (much smaller than the other two) was made up of capital or technology intensive goods including chemicals, iron and steel, light engineering goods, machinery, and transport equipment. In this area, the initial technology was usually provided by the transnational firm.

The second category included simple labor intensive products like clothing and miscellaneous light manufactures — sporting goods, travel goods, furniture, wigs, and plastic products. Here, a division of labor emerged between production done by local industrialists and global marketing done by foreigners. Production of these products was largely in the hands of domestic entrepreneurs or firms, but transnational buying groups played an important role in promoting at least some of the exports.

The clothing sector was particularly important in the Taipei case since it had been upgraded in the early 1950s under the tutelage of US advisers intent on assuring the production of high quality military uniforms.

In the apparel end of textiles, sales to mass marketers, such as K-mart, and subcontracting for foreign brand names, such as Arrow and Jantzen, accounted for a substantial part of production.

J.C. Penney, Montgomery Ward, and Sears Roebuck were also large buyers.

Exports as a percentage of textile production expanded rapidly: 19.6% in 1961; 25.6% in 1966; 38.9% in 1969; and 80% in 1982.

Taiwan’s leading sector, locally owned, thus became export-dependent, with much of the actual marketing and know-how controlled by foreigners.

The third category, products of footloose industries, involved the evolution of extremely specialized labor intensive processes for manufacturing, including assembly operations. The electronics industry which, at first, produced  semi-conductors, tuners, valves, and related components was by far the most important in this sphere. These industries were highly capital as well as technology intensive, embodying the latest technical developments.

By 1972, Hong Kong, Taiwan, South Korea, and Singapore accounted for nearly half the total manufactured products from the entire less developed world. 

These countries, known as the four little tigers, had been observed to have extremely close political ties with the home countries of transnational firms, especially the US and Great Britain. Still, it has been argued that they should not be treated as special cases. Rather, they are said to reflect the two basic factors which influenced the location decisions of transnational firms, political stability and labor “docility.”

In the context of the times, political stability implied that the risks of nationalization or confiscation of assets were reduced to a minimum, and labor docility implied a strict control over trade unions, reducing the possibility of industrial disputes, enabling firms to dismiss workers for the purpose of maintaining discipline, and allowing a cutback in employment in case of recession.

In the case of Taipei, political stability and labor docility were often facilitated through repressive action. Typical statements of multinational executives emphasize the importance of both. Regarding location decisions, one businessman stated:

We won’t go into that country until the government gets the unions in line.

Another said:

We wanted a site where we could have the US Navy between us and Mainland China.

Thus, contrary to the argument that particular countries weren’t special cases, it is possible to argue that compared to other countries in the developing world, a country like Taiwan did have special qualities.

As we have seen, the militarization of Taipei under the KMT government, including the continuing imposition of martial law, assured both domestic political stability and labor docility. These repressive policies were actively supported by the US government.

The presence of US military forces as a consequence of the Cold War conflict ensured that the island was secure from external adversaries.

The presence of the US Seventh Fleet in the Gulf of Tonkin meant that goods, people, and money could flow safely to and from Taipei.

Militarization meant that the conditions necessary for successful economic development were indeed in place. Thus the degree of intervention risk was considered minor compared to that of most less developing countries including Algeria, Brazil, and Liberia.

By 1971, 200 American businesses were operating in Taiwan, the majority of them in Taipei, and foreign firms were responsible for at least 20% of the country’s manufactured exports.

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

US Investment in Cold War Taiwan

The American Multinational Corporation in Taiwan

Economy in Taiwan 1959-1979

Economy in Taiwan 1959-1979 (Part II)