Flexibility, Foresight and Fortuna in Taiwan's Development by Steve Chan & Cal Clark

Author:Steve Chan & Cal Clark [Chan, Steve & Clark, Cal]
Language: eng
Format: epub
Tags: Ethnic Studies, Social Science, Political Science, Regional Studies, General
ISBN: 9781134903245
Google: j1_BW27fgfkC
Goodreads: 17135537
Publisher: Routledge
Published: 1992-01-01T00:00:00+00:00

Rate of U.S.

GNP Growth 0.679 0.115 5.903 0.000

Rate of

export growth 0.059 0.019 3.116 0.006

Rate of

money supply 0.086 0.022 4.002 0.001

Rate of

government

expenditure 0.254 0.076 3.617 0.002

Log of

literacy rate 12.722 4.915 2.588 0.019

Rate of

investment 0.055 0.023 2.331 0.032

Vietnam War 1.616 0.638 2.531 0.021

Constant −55.726 22.057 −2.506 0.021

Adjusted R2: 0.85

Standard error: 1.26

Durban-Watson: 1.85

Sources: see data sources cited in the Appendix.

On the other hand, the strong and positive showing of the government’s fiscal and monetary policies is more supportive of the statist than the developmentalist view. These results are the more remarkable because higher rates of government spending and money supply growth are normally considered to be inflationary. This, then, suggests the ironic conclusion that Taiwan’s generally “conservative” economic policies have had “liberal” or stimulative effects.

The negative results are substantively important as well. First, the dependentistas can claim empirical confirmation to the extent that the right-wing KMT regime had followed their prescriptions about guarding against the economic and social distortions brought by foreign capital penetration. Foreign investment (as opposed to foreign aid) came to Taiwan relatively late and in manageable size and has, therefore, not played a determinative role in its developmental history. Second, the failure of private consumption to stimulate growth underlines the export-dependent nature of Taiwan’s economy. While this challenges conventional dependency theory, it is consistent with the more sophisticated formulation of Gereffi & Wyman (1989) summarized above. Finally, the failure of defense burden to exert a drag on economic expansion provides further support for the descriptive data in Table 4.1 showing that Taiwan has not experienced a direct tradeoff between economic growth and military expenditures. Much of the possible indirect effects of defense burden on economic growth — such as through the former’s influences on the investment rate, export competitiveness, and the government’s fiscal and monetary policies — were explicitly controlled for by including these variables in the regression. Still, these null findings show that Taiwan has escaped an important tradeoff.

In short, the island’s developmental experience clearly calls for a composite explanation that draws upon different aspects of the developmental, dependency, statist, and tradeoff traditions. Thus, all four paradigms offer some useful insights for explaining Taiwan’s economic success. At the same time, each of them alone seems to be too deterministic or incomplete to be able to account fully for this phenomenon, thus suggesting the need for more inclusive and integrated theories (Chan et al. 1990, Clark 1987, 1989, Deyo 1987a, Gereffi & Wyman 1989, Haggard 1990, Winckler & Greenhalgh 1988). The developmental perspective is too unrealistic in assuming that the experience of the early Western industrializers would inevitably be replicated in the Third World, and in assuming that the structure of the global political economy is of little consequence in the latter’s development. On the other hand, the dependency perspective emphasizes so much the structure of the external environment that it leaves relatively little analytic room for human volition, effort mobilization, and effective statecraft. In its orthodox form, dependency theory almost advocates an economic form of predestination, implying that short

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