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Taiwan, Economy

After retreating from the mainland in 1949, the leaders of the government on Taiwan instituted land reforms that increased agricultural productivity. In the 1960s Taiwan adopted export-oriented policies, establishing export processing zones with incentives to attract direct foreign investment. Meanwhile, the government also pursued industrialization. A strong manufacturing sector developed, with most products consisting of labor-intensive goods. During the 1980s the focus of manufacturing shifted to capital- and technology-intensive commodities, such as personal computers and machinery. In an effort to join the World Trade Organization (WTO), an international body that promotes and enforces the provisions of trade laws and regulations, Taiwan’s government began liberalizing the economy in the 1990s by deregulating banking, finance, the stock market, investment, and trade. Taiwan’s membership in the WTO was approved in late 2001.

Taiwan’s economic policies have been extremely successful. In the mid-1990s per capita gross national product (GNP) was about $11,600, compared to $1,100 in the early 1950s (adjusted for inflation). Because its economy has achieved such rapid growth and it boasts one of the world’s highest standards of living, Taiwan is one of Asia’s “Four Tigers,” along with Hong Kong, Singapore, and South Korea. Economists also classify Taiwan as a Newly Industrializing Economy (NIE), an imprecise term that sometimes includes the Four Tigers, Malaysia, the Philippines, Indonesia, Vietnam, and China. In the early 1990s Taiwan had a gross domestic product (GDP) of $216.5 billion.

Taiwan had about 9 million people in the workforce in the early 1990s. About one-tenth of the people were employed in the primary sector, which includes agriculture, forestry, fishing, and mining. The secondary economic sector, which involves processing or combining raw materials into new products, employed nearly two-fifths of the workforce. Tertiary activities, or service industries such as retail, banking, and government employment, employed nearly half of Taiwan’s working people.

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