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Wang, "Analysis of the role of government in Taiwan's industrialization and economic development," 2001

USC Dissertation in Economics.
August 24, 2009

Syu-ping Wang, Ph.D.

Abstract (Summary)
This dissertation studies whether or not it is effective for the state to target industries. We try to find out answers from case studies of Taiwan's industries, and will analyze according to different factors such as different industrial sectors, government policies, and international and domestic conditions. From this study we try to learn what attitudes and policies the government should adopt in promoting industrial development.

This qualitative analysis here will establish a historical narrative of the process of state intervention, which will identify the timing, forms and degree of state intervention, analyze the rationale behind intervention or non-intervention, and the consequent impact on industrial sectors. In our study of Taiwan's semiconductor industry success, we found that the key factor is to find a niche, a sector where Taiwan has competitive advantages in order to develop into a profitable, growing and successful business. It is not necessary that the targeted sector must be the most important or embody state-of-the-art technology in the relevant industry. In our study of the development of Taiwan's automobile industry, we found that the ineffective intervention from Taiwan's government was in fact effective in successfully guiding and promoting Taiwan's economy by efficiently allocating resources to improve economic development.

Basically, this study has made several contributions by providing additional information for the exploration of the industrialization path of East Asian NICs as it indicated that government promotion efforts could improve the targeted industry sector when it is matching its own competitive advantages and domestic demands; while the intervention should be limited in scope and time in the sector which has no local niche and is against domestic business culture.

Moreover, this study has provided additional contributions to the debate between neoclassical, market-oriented and state interventionist theories. This study filled in a hole within the debate between these two schools of thoughts, as it indicated that government intervention, sometimes, is needed in guiding the economy into more value-added, technology-intensive industries.

Advisor: Cheng, Harrison