ABSTRACT
Taiwan, a small island off mainland China with a total area of approximately 36,000 km2 and a current population of 23 million, started development in the post-World War II period from the position of a poor agrarian economy exporting rice, sugar, oolong tea, bananas, and pineapples. By the end of the twenty century it had attained a high income backed by world-class technology-based manufacturing. This chapter examines how today’s Taiwan, as one of the highly industrialized economies in the world, promotes innovation to continue to climb the technological ladder and secure its place in global competition. Our focus is not only on what policies are used for this purpose but also on how and by whom they are formulated and executed. We will see that, since 2010, Taiwan’s key industrial policy instruments have consisted of a uniformly low corporate tax, competitive and strictly monitored “technology development programs,” research institutes that support policy formulation and implementation, various industrial parks, and promotion of SMEs. Taiwan no longer uses a complex set of incentives for targeted industries or products or discriminates ¼rms based on their nationalities.
