ABSTRACT
Efficiency problems with the Taiwan economy often relate to government regulation or protection. For example, the auto industry consists of 11 companies with a total output of about 500,000 vehicles and virtually no exports. Taiwan became a province of China in 1886, only to become a Japanese colony nine years later. Under Japan, Taiwan was a "rice bowl," whose role was to export rice and sugar to Japan. Taiwan benefited from this role in several ways. Japan built up the infrastructure of the island, including its irrigation system, and established an efficient administration. Agricultural policy began with land reform the biggest step toward greater equality that Taiwan has ever taken—and continued with policies to promote its development, but also to tax it. The former achieved a green revolution. From 1953 to 1967, following the land reform, farm output more than doubled, expanding at an average annual rate greater than 5 percent.
