Remarks at the World Forumês Panel Session on New Strategies for Economic Development
by Representative C. J. (Chien-Jen) Chen Taipei Economic and Cultural Representative Office in the United States
Ladies and Gentlemen:
Good morning! I am honored to have been invited to offer a few remarks to open this morningês session on New Strategies for Economic Development. As Taiwanês representative in the United States, I would like to share with you some facts, observations, and ideas about Taiwanês successful development experience. As time is short but my topic is broad, I am going to divide my remarks into four main parts: (1) how successful Taiwan has become, (2) why Taiwan succeeded, (3) what can be learned from our experience, and (4) where we are headed in the future.
I. How successful Taiwan has become
First though let me set the stage for you: Taiwan is a densely populated, mountainous island, about a tenth the size of Colorado, that lacks virtually every essential natural resource yet must support a relatively large population of 23 million.
Fifty years ago, Taiwan was a poor and underdeveloped society with an annual per capita GNP of $150. Our external trade totaled a mere $300 million. Our GNP was around $1 billion. Fifty years later, we have become an affluent and prosperous country with a per capita GNP of over $14,000, annual trade of over $300 billion, and a GNP of $313 billion. Today, we rank 21st in the world in terms of per capita income. We are the 16th largest economy in the world (bigger than Argentina, Switzerland, Belgium, the Russian Federation, and Sweden). We are also the 14th largest trading economy, the United Statesê eighth largest trading partner, and the worldês fourth largest producer of IT products.
Perhaps even more impressive has been Taiwanês democratization. Fifty years ago, Taiwan was a closed and authoritarian society. We enjoyed limited freedom of speech and held few meaningful elections. Fifty years later, Taiwan has become an open, free, and democratic country. We now have 5 open television stations, 146 radio stations, 128 cable TV systems, over 445 daily newspapers, more than 7,000 sundry other periodicals, and countless Internet media.
Taiwan is also a home to over 90 political parties, and virtually every level of public office in Taiwan is vigorously contested through free and fair elections. In 1996, we held the first ever direct election of our president, and four years later, in the presidential election of 2000, we had a peaceful transfer of power, for the first time in fifty years, where an opposition party replaced the ruling party. In the latest Freedom House survey, Taiwan earned the top score of "one" in the area of political rights, up one notch from the year before on a scale from one to seven.
II. Why Taiwan has succeeded
As a well-known American scholar once said, Taiwan's success was "a product of the interaction of a number of forces - Veconomic, political, and social; endogenous and exogenous, constructive and destructive; fortuitous and planned; ideological and pragmatic." Nevertheless, I believe we can identify at least six major factors that enabled our economic and political transformation and which suggest that it was no accident.
First, a peaceful environment: For 100 years, beginning in the middle of the 19th century, China, including Taiwan, was constantly beset by wars, either civil or foreign. And, even after 1949, Taiwan has never been free from the threat of war. Nonetheless, with the exception of a few incidents, Taiwan has enjoyed relative peace, stability, and security. This has allowed the people of Taiwan to dedicate their energy and resources to more productive endeavors and to develop their country without interruption, even if they were not, at first, fully empowered by an authoritarian leadership transplanted from the Chinese mainland.
Second, an educated and industrious populace: Confucian in outlook and tradition, the people on Taiwan have always placed great emphasis on education and achievement. They are diligent, hardworking, resilient, and committed to success. This is perhaps most evident in the development of our education system. In 1952, Taiwan had 1,251 elementary schools, 214 middle and high schools, and 8 universities and colleges. Fifty years later, we have 2,573 elementary schools, 1,161 middle and high schools, and 150 universities and colleges.
Third, strong leadership: The ROC on Taiwan was very fortunate to have leaders who while authoritarian and perhaps a bit heavy-handed by our standards today, were, generally speaking, upright, incorrupt, forward-thinking, and responsive to the needs of the people. In a word, these leaders could lead. Whether their actions on behalf of Taiwan were self-initiated or imposed by external circumstances, these leaders helped our progress.
Fourth, robust systems and effective institutions: Based upon traditional structures, Taiwan developed a free market economy and various systems and institutions necessary to continued development. Planning commissions (such as CUSA, the Council on U.S. Aid), committees (such as the JCRR, Joint Committee on Rural Reconstruction), agricultural cooperatives, and numerous other institutions set standards, cultivated talented individuals, focused energies, and coordinated individual efforts.
Fifth, planning: Taiwan technocrats, many of them trained in the United States, mapped out and implemented a series of development strategies including land reform, import substitution, export promotion, job creation, financial liberalization, and high-tech investment. At the same time, the government instituted a string of five-year projects, the most famous of which was initiated by President Chiang Ching-kuo in 1974. Together, these strategies and plans upgraded Taiwanês infrastructure, raised living standards, empowered individuals, and created opportunities. It is important to note that most of these plans and strategies were gradual, pragmatic, and responsive to real needs.
Sixth, timely foreign assistance. At the outset, from 1952 to 1965, when we lacked capital and know-how, our economic development plans were supported by approximately $1.5 billion in assistance from the U.S. The assistance from the United States served several functions: (1) it made up for government deficits; (2) it eased inflationary pressure; (3) it boosted domestic savings; and, (4) it comprised more that 30% of Taiwanês domestic investment at a time when direct foreign investment in Taiwan was negligible. In addition, the U.S. helped us by providing not only monetary inputs but also know-how and specifically targeted pressure. In a sense, U.S. advice and pressure even played a role in our democratization.
III. What we can learn
Obviously, there is no simple universal blueprint for development. Too many unique elements helped shape the Taiwan experience to make it a viable model, but it does offer several lessons for other less developed countries. We cannot but conclude that peace, education, good leaders, strong institutions, pragmatic planning, and timely assistance are all important factors. Indeed, I believe the Taiwan case proves the World Bankês assertion that reasonably good policies, institutions, governance, and commitment to further reform are keys to effective development.
I am particularly struck by how, without any prior planning or intent, the Taiwan experience matches quite closely the World Bankês thinking about development, especially after 1970. Over the last three decades, awareness grew that physical capital and infrastructure are not enough. At least as important are improving economic management to allow greater play to market forces, promote opportunity, facilitate empowerment, and enhance security. These may not seem like novel ideas. But novelty is less important than reality. The fact is that economic development must take place gradually and be supported by both individuals and institutions. Economic development cannot be achieved through a revolution from above. It requires an approach from above and below, from within and from without.
IV. Where we are headed
Like every other country in the world, Taiwan faces many challenges today. As a maturing democracy, we have eliminated many "unfreedoms" that limit human potential but, at the same time, we are confronted by rising demands domestically, increasing competition from abroad, and the emergence of a powerful PRC, which at once attracts and repels us.
Therefore, my government is now focusing on four priorities: (1) further upgrading the economy in Taiwan, (2) reinventing our government; (3) improving relations with the People's Republic of China, and (4) seeking more room for development and respect in the international community.
First, sustaining economic growth in Taiwan. Last month, my government announced an ambitious 6-year development plan to foster the creativity and talent that Taiwan needs in order to evolve into an environmentally friendly, high-tech island. The plan, called "Challenge 2008," consists of 10 projects to promote training in cutting-edge technologies, subsidize research and development, and improve Taiwanês position as an important regional and international logistics center. The plan places equal emphasis on further raising the quality of life in Taiwan by investing in environmental protection, cultural enrichment, lifelong learning programs, and so forth.
Second, reinventing the government: While we are already a full-fledged democracy, there is a consensus in and out of government and among political parties that we must improve the operative framework and essential quality of our democratic institutions. We also hope to further streamline and downsize our government, which has grown too large and thus less efficient over the years. In other words, we are emphasizing the quality of our democracy.
Third, managing relations with the PRC: How to engage in increasing interactions with the PRC without sacrificing the democracy, freedom, and high quality of life achieved by the people on Taiwan is one of the issues of deepest concern to my government. We recognize that increasing exchanges cannot be blocked, so we are attempting to manage them effectively, resume dialogue, seek a reasonable consensus, and strive for the peaceful resolution of bilateral issues. As many of you may already know, both Taiwan and the PRC acceded to the World Trade Organization a little over six months ago. Indeed, we believe that the time has come to bury the hatchet, so to say, and readjust our relationship with each other in the global economy so that both sides can benefit fully from it.
Fourth, seeking more room for development and respect in the international community: To meet the expectations of our people and adapt to changes required by our democratic and economic development, we must further develop bilateral relations with other countries and expand our participation in international organizations and agencies. Following our accession to the WTO, we hope to participate meaningfully in a wider range of international organizations such as the World Health Organization, the International Civil Aeronautics Organization, the Global Fund to Fight AIDS, Tuberculosis & Malaria, and even the International Association of Chiefs of Police. As you can tell from this truncated list, we are eager to do our part as a responsible and respectable member of the international community. We believe that Taiwan deserves more respect, and we are willing to prove it.
V. Conclusion
The Taiwan development experience is part of the human development experience. It has its unique qualities. Many have studied our experience in depth, and I hope my presentation today has shed some light on it. It is our hope that other developing countries can draw upon our experience and apply the lessons therein to their own particular circumstances, though that may not be easy. We also hope that donors can reflect upon our experience as they set out to help others.
New challenges always arise, but if we can quickly respond to new problems and make timely adjustments to new circumstances, we can look forward to a bright future with growing prosperity and freedom. As the Taiwan experience demonstrates, we can overcome even the steepest obstacles with determination, hard work, and dogged confidence.
Thank you.
