ABSTRACT
Taiwan experienced a severe recession caused partly by the United States and global economic slowdown and partly by political gridlock and the Chen Shui-bian administration's poor economic management. Subsequently, Taiwan's economic performance improved but was viewed by most citizens as mediocre or worse when compared to the other "Asian dragons" or China, the benchmarks for most people in Taiwan. Under Chinese rule Taiwan's economy experienced some economic modernization. Although Taiwan experienced impressive economic progress before Japan colonized the island, its economic structure remained quite similar in many ways to that of the provinces of coastal southern China. Before and during World War II, Japan used Taiwan as a base of operations and invested in industries there, including some heavy industry. Taiwan's economy thus thrived. Taiwan's farmers adjusted to a changing economic situation by reducing the production of some crops and increasing others. Taiwan's economic growth was facilitated by capital inputs, mostly from large quantities of foreign investment.
