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Even though the Republic of China (also known as Taiwan) is not a member of the United Nations, it has been economically successful. What is the secret behind the economic success of it then?

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sounds like a question for economics. –  john Jul 12 '12 at 23:00
    
If only it wasn't closed... –  lins314159 Jul 13 '12 at 0:01
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economics being closed is probably a good thing for history because there is some overlap interest as this question demonstrates –  ihtkwot Jul 13 '12 at 13:15
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Why exactly are you making a n assumption that being a member of the UN is in any way, shape or form correlated to, never mind causes, economic success? –  DVK Jul 21 '12 at 9:35
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I'm uncomfortable with the notion that there is "a secret" to economic success. Although if there were, it would force development economists to stop arguing and obtain productive employment, which would be a good thing.... –  Mark C. Wallace Dec 23 '12 at 20:48

1 Answer 1

up vote 7 down vote accepted

One word - manufacturing. Before China was the country of cheap labor it was Taiwan, just as Japan was before Taiwan. Taiwan built up a lot of manufacturing know-how, and still does so in computer chips and some other respects, it also has many companies that manufacture on the mainland. The capability of Taiwan being able to do this also coincides with its economic system, which as differentiated from the Maoist-Communist system on the mainland, allowed entrepreneurship to blossom as Japanese and US investment came into Taiwan.

For a recent economic overview on Taiwan's GDP Growth:

The Gross Domestic Product (GDP) in Taiwan expanded 1.06 percent in the first quarter of 2012 over the previous quarter. Historically, from 1981 until 2012, Taiwan GDP Growth Rate averaged 1.4000 Percent reaching an all time high of 5.6400 Percent in December of 1990 and a record low of -5.0700 Percent in December of 2008. The Gross Domestic Product (GDP) growth rate provides an aggregated measure of changes in value of the goods and services produced by an economy. Taiwan is an industrialized, developed country, just off the coast of China. Taiwan's economy, one of the "Four Asian Tigers", is export-oriented and specialized in production of electronics and machinery. In fact, Taiwan is one of the world's largest suppliers of computer chips, LCD panels, DRAM computer memory, networking equipment, and consumer electronics. Textile production, although already in decline, is another major industrial export sector. This page includes a chart with historical data for Taiwan GDP Growth Rate.

And for a historical review of Industrial Development in Taiwan you can review Digital Taiwan's overview which puts it better than I can to cover their many areas of Production.

Edited: So I guess if you ask for the Why then you can look up the Taiwan Miracle where although land reform moved labor to Urban Centers, providing for a cheap factory worker group you also have increased US Aid which

created a massive industrial infrastructure, communications, and developed the educational system

Without that industrial infrastructure you could not have the manufacturing take off that the country had, in my opinion. Again the economic system plays a very important role, Capitalist markets on Taiwan allowed it to grow and become a manufacturing/exporter with a cheap, educated labor pool. Since many of these reforms, or a cheap manufacturing workforce, never took place on the Mainland until Deng Xiaoping began reforms that set the stage for the China we have today. As noted on Suite 101's Chinese History page Deng began reforms in 1978 called the

gaige kaifang, or “reform and opening up.” These were intended to jumpstart China’s economy and caused rapid economic growth in China.

Once the commune system was abolished and the markets began to open then China became a place to invest and manufacture in. There is a good overview of Deng's reforms that note them in detail. But without the market forces that began to operate on the mainland in agriculture and industry, just as they did in Taiwan previously, then China never would have taken over.

Although considering the state of Taiwan for the past 10 years I am not sure you can call them an economic success anymore, considering their marginalization within the UN world body they do pretty well. As to the marginalization in numerous world bodies that is another question in itself that deserves its own answer. And yes I know they still do well as a county, my wife comes from Taiwan so I keep an eye as to what is going on there.

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Wikipedia cites other reasons such as a focus on education and land reform. What do your sources say on that? I also don't think their lack of influence in international organisations is much of an issue since major importing economies have been perfectly willing to trade with them. –  lins314159 Jul 13 '12 at 0:04
    
While wikipedia is a good source for many things, its not the only one. Education and land reform are a good basis for the country but don't create a vibrant economy on their own. Taiwan was a manufacturing exporter, and still is in some areas such as computer chips, which allows it to work on the international markets. –  MichaelF Jul 13 '12 at 9:08
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Of course the next question would be why Taiwan developed into such a manufacturing powerhouse, while mostly the same people on the mainland stagnated for two generations (as they had for quite a few more generations before the split). IOW: I think you are displaying a symptom of their success, not the cause. –  T.E.D. Jul 13 '12 at 14:34
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@T.E.D. Added some more material, but not sure what Why you are looking for. Communism on the Mainland would have prevented China from advancing more until Deng, but maybe I am missing what you are getting at. –  MichaelF Jul 16 '12 at 12:16
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@T.E.D.: You are partly right that it's describing symptoms, not causes, but the causes are always the same: Reasonable, pragmatic free market economics. The question really is what is preventing other countries from being as successful (and the answer is always war, socialism, corruption, in that order). –  Lennart Regebro Jul 22 '12 at 15:56

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