Uncertainty, Contingency, and Late Development in Taiwan

Taiwan’s postwar performance rested on two pillars: the capacity of enterprises to adapt to the shifting global division of labor and the ability of the state to guide scarce savings toward lines where opportunities for expansion were greatest. Taken as a whole, the scholarship explains East Asian success as the calculated adjustments in policy to aid economic actors in overcoming bottlenecks and technological backwardness. While acknowledging that firms face challenges when entering established markets, the field largely underestimates the difficulty. Moreover, it fails to understand that even before policy can affect development, the state must free itself of the control of the traditional ruling elites, whose economic interests run counter to the requirements of modern economic growth and the instantiation of which is the cause of underdevelopment in the first instance. Taiwan’s postwar performance was only possible because of highly peculiar circumstances arising from the separation of one ruling elite from its base on the mainland and its willingness, on exile in Taiwan, to eradicate the existing landlord and merchant classes nurtured under Japanese colonialism. With no vested interest in preserving the domestic order, the leadership of the state in exile could then impose the social conditions necessary for capitalism.