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 11.7 per cent between 1951 and 1991, 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 relatively rich and skilled labour force to engage in exporting processed manufactured goods. Trade policy reforms in the late 1950s and early 1960s, 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 1970 to 46.4 per cent over the years 1971–1980, peaking at 53.5 per cent from 1981 to 1990 and declining to 46.1 per cent from 1991 to 1994 (UNCTAD: 1996, p. 110). Total trade value rose from $303 million in 1952 to over $139 billion in 1991, with an average annual growth rate of 17 per cent at current prices. Taiwan Province of China ranked fifteenth in the world for total trade value in 1990, and eleventh and sixteenth for exports and imports respectively. Furthermore, it has enjoyed continuous trade surpluses since 1976, which were well over $10 billion for seven consecutive years before coming down to $9.5 billion in 1992.
