Taiwan's Economy
Lessons from Taiwan
What Taiwan teaches about land reform, small firms, industrial policy, specialisation and concentration risk, and a recap of the module.
Taiwan offers important lessons.
Lessons
- Land reform can support equitable growth.
- Small firms can drive exports through networks.
- Industrial policy with research institutes like ITRI can create high-tech industries.
- Specialisation can create global leadership.
- Brain circulation brings skills home.
- Concentration of critical production creates risk.
Module recap
- Taiwan makes most advanced chips.
- Land reform transferred land to tenants in 1949-53.
- SMEs drove exports.
- Morris Chang founded TSMC in 1987.
- Hsinchu Science Park opened in 1980.
- Taiwanese firms invested heavily in China.
- Foxconn is the largest contract manufacturer.
- Wages stagnated and housing became unaffordable.
- Taiwan phased out nuclear power in 2025.
- Cross-strait risk threatens the world economy.
- Taiwanese firms invest in India.
The institute that built an industry
ITRI, a government research institute, incubated the ideas and people that created TSMC and UMC.
Thinking Taiwan's success was only markets
Government research institutes and policy played key roles.
Key takeaways
- Land reform and SMEs built equitable growth.
- Research institutes enabled high-tech industry.
- Specialisation created global leadership.
- Concentration creates risks.
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