The Role of the State in Taiwan's Development (review)

REVIEWS Joel D. Aberbach, David Dollar, and Kenneth L. Sokoloff, editors. The Role ofthe State in Taiwan's Development. Armonk and London: M. E. Sharpe. 1994. xv, 384 pp. Hardcover $60.00, isbn 1-56324-325-3. Paperback $24.95, isbn 1-56324-326-1. Among the increasing literature on the role of the state in East Asian development , this volume edited by Aberbach, Dollar, and Sokoloff on Taiwan's experience has at least two unique features. First, it calls the role ofthe state and its various economic policies into question and examines the extent to which Taiwan's economic growth has actually been stimulated and shaped by state intervention in the past four decades. Though government policies on overall industrial development and exports are the major focus of attention throughout the book, some other specific topics like fiscal policy, investment in higher education, state policy on the development ofthe automobile and semiconductor industries, financial markets, and the state's critical shift from import substitution to exportled growth are also examined in different chapters. With the arguments presented in the book, the serious reader can therefore reassess the efficacy and impact of state policy. Second, the majority of the authors contributing to this volume are social scientists in Taiwan who have firsthand knowledge and research experience in the topics on which they have chosen to write. Thus, this book can be seen as a realistic reflection ofhow local scholars look at the performance of the KMT state in relation to the economy ofTaiwan. The fourteen chapters compiled in this volume have more or less fulfilled what the editors hoped to achieve, that is, to increase our understanding ofthe causes and consequences ofTaiwan's rapid economic development. The state and its relevant policies are regarded as the causes, while the consequences are measured by the relative success or failure in various key economic sectors. The assessment ofthese consequences by qualified economists and political scientists, in the areas offoreign trade, the productivity ofmanufacturing industries, financial markets, fiscal policy, and automobile and semiconductor industrial development , is quite convincing.© 1996 by UniversityIt is interesting to see that although all ofthe authors agree that the KMT ofHawai'i Pressstate has been active in development, Taiwan's economic success can in no way be fully explained by the state's seemingly interventionist policies. No single author has taken the decisive view that there is a direct cause-and-effect relationship 88 China Review International: Vol. 3, No. 1, Spring 1996 between identified state policies and measured economic performance. This "consensus" leads the editors to conclude that the secret ofTaiwan's rapid and effective development lies in governmental restraint and confinement. Such a theoretical assertion is too simplistic and can be mistaken as merely another liberaleconomic rationale for East Asian economic success. The broader national and international political and economic contexts that might have significant impacts on shaping the state's behavior in the area ofpolicy are, unfortunately, not properly dealt with. Therefore, the "causes" ofTaiwan's development are only partially explained. For example, a discussion of state-business relations is completely missing in the book. Like the authors of the World Bank report titled The EastAsian Miracle (1993), the authors and editors of this book seem either to take state-business relations for granted or to assume that the state has developed nonproblematic relations with the private sector. In fact, political and ethnic tensions have long existed in Taiwan's business-state relations in the first few decades of development. And such structural tensions could likely have a profound influence on how the state actually behaves in economic policy making. On the other hand, the availability ofworld markets and the direct involvement ofU.S. and Japanese capital also have an important bearing on state performance. The two chapters written by Haggard-Pang and Hsu, analyzing the development -strategy shift and the changing ideology of the KMT state in the late 1950s and early 1960s, have added political insight to the overall economic discussion on state and development in Taiwan. Another chapter, by Cheng and Hsiung, takes a realistic feminist view arguing that the working ofthe state's export-oriented strategy has depended upon a male-dominated...