ABSTRACT
Over the last decades, Taiwan Province of China successfully transformed itself from an agricultural-based economy into an industrial economy. The average annual growth rate of industrial production reached 1 1 .7 per cent between 195 1 and 1 99 1 , greatly helped by strong export performance. Due to the limited size of the domestic market and the lack of natural resources, the only way for Taiwanese industries to capture the benefits of economies of scale and to pay for needed material inputs and machinery was to link up with the international market, using its comparative advantage of a relat ively rich and skilled labour force to engage in exporting processed manu factured goods. Trade policy reforms in the late 1 950s and early 1 960s, forcing Taiwan Province of China towards an export-oriented regime, proved to be critical for success. The average ratio of exports to GNP rose from 20.4 per cent between 1961 and 1 970 to 46.4 per cent over the years 1 97 1-1980, peaking at 53 .5 per cent from 198 1 to 1 990 and declining to 46. l per cent from 1 99 1 to 1 994 (UNCTAD: 1 996, p. 1 1 0). Total trade value rose from $303 million in 1 952 to over $ 1 39 billion in 1 99 1 , with an average annual growth rate of 1 7 per cent at current prices. Taiwan Prov ince of China ranked fifteenth in the world for total trade value in 1 990, and eleventh and sixteenth for exports and imports respectively. Furthermore, it has enjoyed continuous trade surpluses since 1 976, which were well over $ 1 0 billion for seven consecutive years before coming down t o $9.5 billion in 1 992.
