ABSTRACT
To appreciate fully Taiwan's economic role in East Asia requires consideration of: its achievements in its own economic development; its responses to external stimulus—foreign aid and direct investment; and its active role as exporter and emergence as major foreign investor. Two pivotal factors influential in shaping Taiwan's economic development strategies and policies were a socialist philosophy of government brought over from the mainland, and mistrust and frictions between the minority Kuomintang supporters who controlled the government, and the numerically dominant Taiwanese population. Interpretation of Taiwan's economic role in East Asia is best accomplished with an understanding of the extent and nature of extensive government role. Taiwan's main contribution to East Asian development was to find a strategy that works, yielding unprecedented growth rates not only in Taiwan but also in other countries in the region that adopted it. Despite ostensible allegiance to market forces, in practice Taiwan maintains a heavily protected domestic economy.
