ABSTRACT
Beginning in 1958, government leaders in Taiwan switched their development strategy from an import-substitution policy for a limited domestic market to the development of labor-intensive, manufactured goods for export to world markets. The switch in policy from import substitution to export promotion substantially opened the economy, increasing the role of foreign trade. Economic planning in Taiwan remained largely indicative, with the government setting major targets for output, investment, foreign trade, the balance of payments, social development, urban and regional development, infrastructure, public investment in several key heavy industries, and the overall structure of the economy. Rising domestic savings helped finance sharp increases in gross fixed capital formation, which rose from 16 percent of gross domestic product in 1960 to 20 percent in 1967; it remained in the high 20s and low 30s since 1974. Rapid growth on Taiwan went hand in hand with greater equality in the distribution of income.
