What can explain Taiwan’s growth miracle over the period 1950-2000? : export promotion, capital accumulation, policies and institutions

Abstract

This thesis surveys the literature on the sources and explanations of Taiwan‟s growth miracle in the period 1950-2000. The empirical literature on the decomposition of Taiwan‟s growth experience indicates that a large part of Taiwan‟s economic growth has been caused by accumulation of human and physical capital. The high growth in physical capital was enabled by high savings rates. The sources of these high savings rates will be discussed in this thesis. Human capital accumulation can be traced to beneficial demographic changes, increased female labour participation and investments in education. Still, the productivity growth, measured by Total Factor Productivity (TFP), has also been impressive in the case of Taiwan. The explanations for this increased productivity are disputed. This thesis will present the debates over the export-led growth hypothesis and the merits of industrial policies in Taiwan. Lastly, I will look at the external factors and institutional framework that were conducive to economic growth in Taiwan.