ABSTRACT
State developmentalism has been characteristic of many East Asian high-growth economies including Taiwan in the earlier periods of their economic development. The state sector in Taiwan's economy was very big due to historical factors and it was conducive to economic and industrial development during that period. Beginning in the mid-1990s, coinciding with the simultaneous arrival of democracy and populism, the developmental orientation has gradually given way to the rise of clientelism, as all political parties had to find resources/positions to assign to their supporters and affiliates. The existence of a big state sector became an attraction that almost no politicians could resist, so that sector gradually became the purse of political party in power, thus the phrase "mutinous mutation.” The situation persists with the degree of severity varying with the particular characters of the leaders/parties. The existence of these government-controlled enterprises is not good for democracy. They should be truly privatized. The state should have no business in running companies in say banking, steel making, petroleum refining, and shipping, given that the private sector and the capital market in Taiwan have both become matured. To this date, the combined sales of government-controlled companies is still as large as about 11% of that of all publicly listed companies.
