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AMERICAN DIPLOMACY AND EXPORT-ORIENTED INDUSTRIALIZATION ON TAIWAN

Published online by Cambridge University Press:  22 April 2020

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Abstract

Scholars have pointed to the period 1958-1962 as the beginning of Taiwan's transition to export-oriented industrialization. Although the Nationalist Party (KMT) had traditionally supported state socialism, the KMT began to oversee economic reforms in the late 1950s, setting Taiwan on the course of export-led growth under a capitalist model. Using archival materials from both the United States and Taiwan, I argue that the reforms resulted from U.S. influence on how the KMT understood the role of economic development in its grand strategy. U.S. arguments succeeded in creating political support at the highest levels of the KMT leadership for a reform-oriented faction in the economic bureaucracy. This finding shows how an aid donor can promote economic reforms even when the recipient is strategically important for the donor: although threats to enforce conditionality may not be credible, the donor can influence the recipient through persuasion.

Keywords

TaiwanDevelopmentU.S. Foreign PolicyCold WarForeign Aid
Type
Article
Information
Journal of East Asian Studies , Volume 20 , Issue 3 , November 2020 , pp. 463 - 483
Copyright
Copyright © East Asia Institute 2020

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References

REFERENCES

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Haggard, Stephan, and Pang, Chien-kuo. and Yu, Zheng. 2013. “Institutional Innovation and Investment in Taiwan: The Micro-Foundations of the Developmental State.” Business and Politics 15 (4): 435–466.CrossRefGoogle Scholar
Ho, Ming-sho. 2007. “The Rise and Fall of Leninist Control in Taiwan's Industry.” The China Quarterly 189: 162–179.CrossRefGoogle Scholar
Ho, Samuel P.S. 1978. Economic Development of Taiwan, 1860–1970. New Haven: Yale University Press.Google Scholar
Jacoby, Neil H. 1966. US Aid to Taiwan: A Study of Foreign Aid, Self-Help, and Development. New York: Frederick A. Praeger.Google Scholar
Jiang, Jieshi. 1951. Zhongguo jingji xueshuo [Chinese economic theory]. Taipei: Yangming Shan Zhuangyin.Google Scholar
Johnson, Chalmers. 1982. MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975. Stanford: Stanford University Press.Google Scholar
Johnson, Chalmers. 1987. “Political Institutions and Economic Performance: the Government-Business Relationship in Japan, South Korea, and Taiwan.” In The Political Economy of the New Asian Industrialism, edited by Deyo, Frederic C., 136–164. Ithaca: Cornell University Press.Google Scholar
Keohane, Robert O. 1971. “The Big Influence of Small Allies.” Foreign Policy 2: 161–182.CrossRefGoogle Scholar
Killick, Tony. 1997. “Principals, Agents and the Failings of Conditionality.” Journal of International Development 9 (4): 483–495.3.0.CO;2-S>CrossRefGoogle Scholar
Kim, Patricia. 2016. “Using Diplomacy to Shape China's Behavior: Coercion, Bargaining and Persuasion in U.S.-China relations, 1971–2003.” PhD diss., Princeton University.Google Scholar
Kirby, William C. 1990. “Continuity and Change in Modern China: Economic Planning on the Mainland and on Taiwan, 1943–1958.” The Australian Journal of Chinese Affairs 24: 121–141.CrossRefGoogle Scholar
Kirby, William C.. 2000. “Engineering China: Birth of the Developmental State, 1928–1937.” In Becoming Chinese: Passages to Modernity and Beyond, edited by Yeh, Wen-Hsin. Berkeley: University of California Press.Google Scholar
Kuo, Tai-Chun, and Myers, Ramon H.. 2012. Taiwan's Economic Transformation: Leadership, Property Rights and Institutional Change 1949–1965. New York: Routledge.CrossRefGoogle Scholar
Lasswell, Harold D. 1941. “The Garrison State.” American Journal of Sociology 46 (4): 455–468.CrossRefGoogle Scholar
“Li Guoding xiansheng dashi nianbiao [Record of the major events in the life of Mr. Li Guoding].” 2019. Li Guoding: Taiwan xiandaihua zhi lu [Li Guoding: Taiwan's path to modernization], Academia Sinica. Accessed April 30, 2019. http://ktli.sinica.edu.tw/ktli1.html.Google Scholar
Lin, Ching-yuan. 1973. Industrialization in Taiwan, 1946–1972: Trade and Import-Substitution Policies for Developing Countries. New York: Praeger Publishers.Google Scholar
Lin, Hsiao-ting. 2016. Accidental State: Chiang Kai-shek, the United States, and the Making of Taiwan. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
Lindvall, Johannes. 2009. “The Real but Limited Influence of Expert Ideas.” World Politics 61 (4): 703–730.CrossRefGoogle Scholar
Mandelkern, Ronen, and Shalev, Michael. 2010. “Power and the Ascendance of New Economic Policy Idea: Lessons from the 1980s Crisis in Israel.” World Politics 62 (3): 459–495.CrossRefGoogle Scholar
McNamara, Kathleen. 1999. “Consensus and Constraint: Ideas and Capital Mobility in European Monetary Integration.” Journal of Common Market Studies 37 (3): 455–476.CrossRefGoogle Scholar
Molenaers, Nadia, Dellepiane, Sebstian, and Faust, Jorg. 2015. “Political Conditionality and Foreign Aid.” World Development 75: 2–12.CrossRefGoogle Scholar
Rostow, W.W. 1985. Eisenhower, Kennedy, and Foreign Aid. Austin: University of Texas Press.Google Scholar
Schelling, Thomas C. 1966. Arms and Influence. New Haven: Yale University Press.Google Scholar
Silove, Nina. 2018. “Beyond the Buzzword: The Three Meanings of ‘Grand Strategy.’” Security Studies 27 (1): 27–57.CrossRefGoogle Scholar
Taylor, Jay. 2011. The Generalissimo: Chiang Kai-shek and the Struggle for Modern China. Cambridge, MA: Belknap Press.Google Scholar
Tucker, Nancy Bernkopf. 1994. Taiwan, Hong Kong, and the United States, 1945–1992: uncertain friendships. New York: Twayne Publishers.Google Scholar
Wade, Robert. 2004. Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization, Second Edition. Princeton: Princeton University Press.Google Scholar
Wang, Lutao Sophia Kang. 2006. K.T. Li and the Taiwan Experience. Hsinchu, Taiwan: National Tsing Hua University Press.Google Scholar
Wright, Joseph and Winters, Matthew. 2010. “The Politics of Effective Foreign Aid.” Annual Review of Political Science 13: 61–80.CrossRefGoogle Scholar
Woods, Ngaire. 1995. “Economic Ideas and International Relations: Beyond Rational Neglect.” International Studies Quarterly 39 (2): 161–180.CrossRefGoogle Scholar
World Bank. 1993. The East Asian Miracle: Economic Growth and Public Policy. World Bank Research Report. New York: Oxford University Press.Google Scholar
Zanasi, Margherita. 2006. Saving the Nation: Economic Modernity in Republican China. Chicago: University of Chicago Press.CrossRefGoogle Scholar
Academia Historica, TaiwanGoogle Scholar
C. K. Yen Presidential PapersGoogle Scholar
Chiang Kai-shek Presidential PapersGoogle Scholar
National Archives, Washington, DCGoogle Scholar
2.500.002 Policy Affecting Aid (1951). 1951. Records of the Office of Chinese Affairs, 1945–1955 Collection (available through Archives Unbound, www.gale.com/primary-sources/archives-unbound)Google Scholar
Decimal Files (1955–1959), Record Group 59 (RG 59)Google Scholar
Amsden, Alice. 1985. “The State in Taiwan's Economic Development.” In Bringing the State Back In, edited by Evans, Peter B., Rueschemeyer, Dietrich, and Skocpol, Theda, 78–106. New York: Cambridge University Press.CrossRefGoogle Scholar
Balassa, Bela. 1988. “The Lessons of East Asian Development: An Overview.” Economic Development and Cultural Change 36 (3) Supplement: S273–S290.CrossRefGoogle Scholar
Bearce, David H., and Tirone, Daniel C.. 2010. “Foreign Aid Effectiveness and the Strategic Goals of Donor Governments.” The Journal of Politics 72 (3): 837–851.CrossRefGoogle Scholar
Bermeo, Sarah Blodgett. 2017. “Aid Allocation and Targeted Development in an Increasingly Connected World.” International Organization 71: 735–766.CrossRefGoogle Scholar
Brands, Hal. 2014. What Good is Grand Strategy? Power and Purpose in American Statecraft from Harry S. Truman to George W. Bush. Ithaca: Cornell University Press.CrossRefGoogle Scholar
Cha, Victor D. 2016. Powerplay: The Origins of the American Alliance System in Asia. Princeton: Princeton University Press.Google Scholar
Chen, Cheng. 1961. Land Reform in Taiwan. Taiwan: China Publishing.Google Scholar
Chen, Cheng. 2005. Chen Cheng xiansheng huiyilu: jianshe Taiwan [The memoirs of Chen Cheng: The development of Taiwan], Volume 1, edited by Yueshun, Xue. Xindian, Taiwan: Academia Historica.Google Scholar
Chen, Cheng. 2007. Chen Cheng xiansheng shuxin ji: yu Jiang Zhongzheng xiansheng wanglai handian [The letters of Chen Cheng: Correspondence with Chiang Kai-shek], edited by Zhilin, He. Xindian, Taiwan: Academia Historica.Google Scholar
Chen, Cheng. 2015. Chen Cheng xiansheng riji [The diaries of Chen Cheng], Volume 2, edited by Qiumin, Lin, Huifen, Ye, and Shengxiong, Su. Taipei: Academia Historica and Institute of Modern History, Academia Sinica.Google Scholar
Chen, Hongmin 2011. “Jiang Jieshi yu ‘tanhe Yu Hongjun an’ de chuzhi” [Chiang Kai-shek and his handling of the Yu Hongjun impeachment case]. In Chiang Kai-Shek's Diaries and the Study of Republican Chinese History, Volume 2, edited by Fangshang, Lu, 659–670. Taipei: Shijie Datong Chuban Youxian Gongsi.Google Scholar
Chen, Hongmin, Xingsheng, Zhao, and Wending, Han. 2010. Jiangjieshi houban sheng [The later life of Chiang Kai-shek]. Zhejiang: Zhejiang University Press.Google Scholar
Cheng, Tun-Jen, Haggard, Stephen, and Kang, David. 1998. “Institutions and Growth in Korea and Taiwan: The Bureaucracy.” The Journal of Development Studies 34 (6): 87–111.CrossRefGoogle Scholar
Christensen, Thomas J. 1996. Useful Adversaries: Grand Strategy, Domestic Mobilization, and Sino-American Conflict, 1947–1958. Princeton: Princeton University Press.Google Scholar
Christensen, Thomas J. 2011. Worse than a Monolith: Alliance Politics and Problems of Coercive Diplomacy in Asia. Princeton: Princeton University Press.Google Scholar
Clift, Ben, and Tomlinson, Jim. 2012. “When Rules Started to Rule: The IMF, Neo-Liberal Economic Ideas and Economic Policy Change in Britain.” Review of International Political Economy 19 (3): 477–500.CrossRefGoogle Scholar
Collier, David. 2011. “Understanding Process Tracing.” Political Science and Politics 44 (4): 823–830.CrossRefGoogle Scholar
Cullather, Nick. 1996. “Fuel for the Good Dragon: The United States and Industrial Policy in Taiwan, 1950–1965.” Diplomatic History 20 (1): 1–25.CrossRefGoogle Scholar
Cumings, Bruce. 1984. “The Origins and Development of the Northeast Asian Political Economy: Industrial Sectors, Product Cycles, and Political Consequences.” International Organization 38 (1): 1–40.CrossRefGoogle Scholar
Deaton, Angus. 2013. The Great Escape: Health, Wealth, and the Origins of Inequality. Princeton: Princeton University Press.Google Scholar
Doner, Richard F., Ritchie, Bryan K., and Slater, Dan. 2005. “Systemic Vulnerability and the Origins of Developmental States: Northeast Asia and Southeast Asia in Comparative Perspective.” International Organization 59 (2): 327–361.CrossRefGoogle Scholar
Dreher, Axel, Sturm, Jan-Egbert, and Vreeland, James. 2009. “Development Aid and International Politics: Does Membership on the UN Security Council Influence World Bank Decisions?” Journal of Development Economics 88: 1–18.CrossRefGoogle Scholar
Dunning, Thad. 2004. “Conditioning the Effects of Aid: Cold War Politics, Donor Credibility, and Democracy in Africa.” International Organization 58: 409–423.CrossRefGoogle Scholar
Easterly, William. 2003. “Can Foreign Aid Buy Growth?” Journal of Economic Perspectives 17 (3): 23–48.CrossRefGoogle Scholar
Foreign Relations of the United States, 1950–1963. Washington, DC: US Government Printing Office.Google Scholar
Friedberg, Aaron. 1992. “Why Didn't the United States become a Garrison State?” International Security 16 (4): 109–142.CrossRefGoogle Scholar
Gold, Thomas B. 1986. State and Society in the Taiwan Miracle. Armonk: M.E. Sharpe.Google Scholar
Haggard, Stephan. 1990. Pathways from the Periphery: The Politics of Growth in the Newly Industrializing Countries. Ithaca: Cornell University Press.Google Scholar
Haggard, Stephan, and Pang, Chien-kuo. 1994. “The Transition to Export-Led Growth in Taiwan.” In The Role of the State in Taiwan's Development, edited by Aberbach, Joel D., Dollar, David, and Sokoloff, Kenneth L., 47–89. Armonk: M.E. Sharpe.Google Scholar
Haggard, Stephan, and Pang, Chien-kuo. and Yu, Zheng. 2013. “Institutional Innovation and Investment in Taiwan: The Micro-Foundations of the Developmental State.” Business and Politics 15 (4): 435–466.CrossRefGoogle Scholar
Ho, Ming-sho. 2007. “The Rise and Fall of Leninist Control in Taiwan's Industry.” The China Quarterly 189: 162–179.CrossRefGoogle Scholar
Ho, Samuel P.S. 1978. Economic Development of Taiwan, 1860–1970. New Haven: Yale University Press.Google Scholar
Jacoby, Neil H. 1966. US Aid to Taiwan: A Study of Foreign Aid, Self-Help, and Development. New York: Frederick A. Praeger.Google Scholar
Jiang, Jieshi. 1951. Zhongguo jingji xueshuo [Chinese economic theory]. Taipei: Yangming Shan Zhuangyin.Google Scholar
Johnson, Chalmers. 1982. MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975. Stanford: Stanford University Press.Google Scholar
Johnson, Chalmers. 1987. “Political Institutions and Economic Performance: the Government-Business Relationship in Japan, South Korea, and Taiwan.” In The Political Economy of the New Asian Industrialism, edited by Deyo, Frederic C., 136–164. Ithaca: Cornell University Press.Google Scholar
Keohane, Robert O. 1971. “The Big Influence of Small Allies.” Foreign Policy 2: 161–182.CrossRefGoogle Scholar
Killick, Tony. 1997. “Principals, Agents and the Failings of Conditionality.” Journal of International Development 9 (4): 483–495.3.0.CO;2-S>CrossRefGoogle Scholar
Kim, Patricia. 2016. “Using Diplomacy to Shape China's Behavior: Coercion, Bargaining and Persuasion in U.S.-China relations, 1971–2003.” PhD diss., Princeton University.Google Scholar
Kirby, William C. 1990. “Continuity and Change in Modern China: Economic Planning on the Mainland and on Taiwan, 1943–1958.” The Australian Journal of Chinese Affairs 24: 121–141.CrossRefGoogle Scholar
Kirby, William C.. 2000. “Engineering China: Birth of the Developmental State, 1928–1937.” In Becoming Chinese: Passages to Modernity and Beyond, edited by Yeh, Wen-Hsin. Berkeley: University of California Press.Google Scholar
Kuo, Tai-Chun, and Myers, Ramon H.. 2012. Taiwan's Economic Transformation: Leadership, Property Rights and Institutional Change 1949–1965. New York: Routledge.CrossRefGoogle Scholar
Lasswell, Harold D. 1941. “The Garrison State.” American Journal of Sociology 46 (4): 455–468.CrossRefGoogle Scholar
“Li Guoding xiansheng dashi nianbiao [Record of the major events in the life of Mr. Li Guoding].” 2019. Li Guoding: Taiwan xiandaihua zhi lu [Li Guoding: Taiwan's path to modernization], Academia Sinica. Accessed April 30, 2019. http://ktli.sinica.edu.tw/ktli1.html.Google Scholar
Lin, Ching-yuan. 1973. Industrialization in Taiwan, 1946–1972: Trade and Import-Substitution Policies for Developing Countries. New York: Praeger Publishers.Google Scholar
Lin, Hsiao-ting. 2016. Accidental State: Chiang Kai-shek, the United States, and the Making of Taiwan. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
Lindvall, Johannes. 2009. “The Real but Limited Influence of Expert Ideas.” World Politics 61 (4): 703–730.CrossRefGoogle Scholar
Mandelkern, Ronen, and Shalev, Michael. 2010. “Power and the Ascendance of New Economic Policy Idea: Lessons from the 1980s Crisis in Israel.” World Politics 62 (3): 459–495.CrossRefGoogle Scholar
McNamara, Kathleen. 1999. “Consensus and Constraint: Ideas and Capital Mobility in European Monetary Integration.” Journal of Common Market Studies 37 (3): 455–476.CrossRefGoogle Scholar
Molenaers, Nadia, Dellepiane, Sebstian, and Faust, Jorg. 2015. “Political Conditionality and Foreign Aid.” World Development 75: 2–12.CrossRefGoogle Scholar
Rostow, W.W. 1985. Eisenhower, Kennedy, and Foreign Aid. Austin: University of Texas Press.Google Scholar
Schelling, Thomas C. 1966. Arms and Influence. New Haven: Yale University Press.Google Scholar
Silove, Nina. 2018. “Beyond the Buzzword: The Three Meanings of ‘Grand Strategy.’” Security Studies 27 (1): 27–57.CrossRefGoogle Scholar
Taylor, Jay. 2011. The Generalissimo: Chiang Kai-shek and the Struggle for Modern China. Cambridge, MA: Belknap Press.Google Scholar
Tucker, Nancy Bernkopf. 1994. Taiwan, Hong Kong, and the United States, 1945–1992: uncertain friendships. New York: Twayne Publishers.Google Scholar
Wade, Robert. 2004. Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization, Second Edition. Princeton: Princeton University Press.Google Scholar
Wang, Lutao Sophia Kang. 2006. K.T. Li and the Taiwan Experience. Hsinchu, Taiwan: National Tsing Hua University Press.Google Scholar
Wright, Joseph and Winters, Matthew. 2010. “The Politics of Effective Foreign Aid.” Annual Review of Political Science 13: 61–80.CrossRefGoogle Scholar
Woods, Ngaire. 1995. “Economic Ideas and International Relations: Beyond Rational Neglect.” International Studies Quarterly 39 (2): 161–180.CrossRefGoogle Scholar
World Bank. 1993. The East Asian Miracle: Economic Growth and Public Policy. World Bank Research Report. New York: Oxford University Press.Google Scholar
Zanasi, Margherita. 2006. Saving the Nation: Economic Modernity in Republican China. Chicago: University of Chicago Press.CrossRefGoogle Scholar