Published online by Cambridge University Press: 11 November 2008
Are there lessons Africa can learn from Taiwan and the other East Asian newly industrialising countries (NICs)? Evaluating the relevance of their experience is fraught with difficulties inherent in making comparisons across regions, during different periods of time, with different preconditions. Clearly, developments in Africa have to be based on local institutions, values, and resources. Yet Taiwan's successful combination of industrialisation and growth with equity reflects goals that are important for African policy-makes. The country's G.N.P. per capita increased from $143 in 1953 to $7,284 in 1990. Even during the 1980s, its economy grew at an average annual rate of 8·2 per cent as against only 0·5 per cent in sub-Saharan Africa for the period 1980–7. Taiwan's sustained growth has been widely shared by all income groups, with the top fifth of households only receiving 4·5 times as much as the bottom fifth. By way of contrast, in Côte d'Ivoire (1986–7) and in Botswana (1985–6), the share of the top 20 per cent was respectively almost ii and 24 times that of the bottom 20 per cent.
1 World Bank, Sub-Saharan Africa: From Crisis to Sustainable Growth. A Long-Term Perspective Study (Washington, DC, 1989)Google Scholar; Economic Planning Council (E.P.C.), Taiwan Statistical Data Book (Taipei, 1975), current prices;Google Scholar and Economist Intelligence Unit, Country Report: Taiwan, No. 1 (London, 1993).Google Scholar
2 Li, K. T., The Evolution of Policy Behind Taiwan's Development Success (New Haven, 1988), p. 161,Google Scholar and World Bank, World Development Report, 1992 (Washington, DC, 1992), pp. 276–7.Google Scholar
3 Ho, Samuel, Economic Development of Taiwan, 1860–1970 (New Haven, 1978),Google Scholar and Ranis, Gustav, ‘Industrial Development’, in Galenson, Walter (ed.), Economic Growth and Structural Change in Taiwan: the postwar experience of the Republic of China (Ithaca, NY, 1979), pp. 206–62.Google Scholar
4 Davidson, Basil, Modern Africa (London and New York, 1983), p. 81.Google Scholar
5 Taiwan Statistical Data Book, 1975. The U.S. provided an additional $2,500 million in military supplies and equipment, almost entirely financed by grants.Google Scholar
6 From Crisis to Sustainable Growth, p. 251.
7 Simon, Denis, ‘Technology Transfer and Technology Policies on Taiwan’, in Edwin, A. Winkler and Greenhalgh, Susan (eds.), Contending Approaches to the Political Economy of Taiwan (Armonk, NY, 1988), p. 148.Google Scholar
8 Taiwan Statistical Data Book, 1975,Google Scholar and Jacoby, Neil, U.S. Aid to Taiwan: a study of foreign aid, self-help and development (New York, 1966), p. 180.Google Scholar
9 Ruttan, Vernon, ‘Integrated Rural Development Programmes: a historical perspective’, in World Development (Oxford), 12, 4, 1984, pp. 393–401.Google Scholar
10 Cotter, William R., ‘How AID Fails to Aid Africa’, in Foreign Policy (Washington, DC), Spring 1979, p. 107.Google Scholar
11 Hazlewood, Arthur, ‘Foreign Aid and Economic Development in Kenya’, in Lele, Uma and Nabi, Ijaz (eds.), Transitions in Development: the role of aid and commercial flows (San Francisco, International Center for Economic Growth, 1991), p. 137.Google Scholar
12 From Crisis to Sustainable Growth, p. 251.
13 The Government's appropriation of Japanese holdings and investments after the end of the war enabled extensive public land (25 per cent of the arable hectarage in Taiwan) to be sold to smallholders on easy terms, and allowed landowners to be compensated by industrial bonds based on confiscated Japanese factories.
14 Amsden, Alice, ‘Taiwan's Economic History: a case of étatisme and a challenge to dependency theory’, in Modern China (Beverly Hills, CA), 5, 3, 07 1979, p. 353.Google Scholar
15 Thorbecke, Erik, ‘Agricultural Development’, in Galenson, (ed.), op. cit. pp. 172 and 184.Google Scholar
16 U.S. Department of Agriculture, Changes in Agriculture in 26 Developing Nations, 1948 to 1963, cited in Ho, op. cit. p. 178.Google Scholar
17 Johnston, Bruce F., Hoben, Allan and Jaeger, William K., ‘United States Activities to Promote Agricultural and Rural Development in Sub-Saharan Africa’, in Lele, Uma (ed.), Aid to African Agriculture: lessons from two decades of donors' experience (Baltimore and London, 1992), p. 301.Google Scholar
18 Thorbecke, loc. cit. p. 203.
19 Council for Economic Planning and Development (C.E.P.D.), Taiwan Statistical Data Book (Taipei, 1989).Google Scholar
20 ‘Education in Sub-Saharan Africa: policies for adjustment, revitalization, and expansion’, a World Bank Policy Study, Washington, DC, 1988, p. 131, and From Crisis to Sustainable Growth, p. 274.Google Scholar
21 World Bank, ‘Education in Sub-Saharan Africa’, p. 138, Taiwan Statistical Data Book, 1975,Google Scholar and Unesco, Statistical Yearbook, 1990 (Paris, 1990).Google Scholar
22 Woo, Jennie Hay, ‘Education and Industrial Growth in Taiwan: a case of planning’, Harvard Institute for International Development, Cambridge, MA, Employment and Enterprise Policy Analysis Discussion Paper No. 18, 08 1988.Google Scholar
23 Ibid. p. 33, and Zymelman, Manuel, Science, Education, and Development in Sub-Saharan Africa (Washington, DC, 1990), World Bank Technical Paper No. 124, p. 27.Google Scholar
24 Fei, John, Ranis, Gustav, and Kuo, Shirley, Growth with Equity: the Taiwan case (New York, 1979), pp. 10–11.Google Scholar
25 Taiwan Statistical Data Book, 1989.
26 Ranis, loc. cit. p. 245, fn. 45, and Ho, op. cit. p. 118.
27 Taiwan Statistical Data Book, 1975.
28 Levy, Brian, ‘Prospects and Perils for Small and Medium Enterprises in Outward-Oriented Industrial Expansion: lessons from Korea and Taiwan’, Harvard E.E.P.A. Discussion Paper No. 8, November 1987, p. 2.Google Scholar
29 Ranis, loc. cit. p. 220.
30 Nash, John, ‘An Overview of Trade Policy Reform with Implications for Sub-Saharan Africa’, Trade Policy Division, The World Bank, Washington, DC, n.d. (c 1989), p. 11.Google Scholar
31 Rodrik, Dani, ‘How Should Structural Adjustment Programmes Be Designed?’, in World Development, 18, 7, 1990, p. 940.CrossRefGoogle Scholar
32 Riegg, Nicholas, ‘The Role of Fiscal and Monetary Policies in Taiwan's Economic Development’, Ph.D. dissertation, University of Connecticut, Storrs, 1978, p. 96,Google Scholar cited in Wade, Robert, Governing the Market: economic theory and the role of government in East Asian industrialization (Princeton, 1990), p. 167.Google Scholar
33 Li, op. cit.
34 Although the high interest rates in Taiwan seem to have been healthy there, we cannot be sure that they would have the same beneficial effect in Africa. As Wade points out in op. cit. p. 172, high interest rates can ‘undermine export competitiveness, cause dangerously high debt/equity ratios, crowd out new borrowers, and fuel inflation’.Google Scholar
35 Taiwan Statistical Data Book, 1975.
36 Ian, M. D. Little, ‘An Economic Renaissance’, in Galenson (ed.), op. cit. p. 481.Google Scholar
37 Erik Lundberg, ‘Fiscal and Monetary Policies’, in ibid. p. 305.
38 Kuo, Shirley, Ranis, Gustav, and Fei, John, The Taiwan Success Story: rapid growth with improved distribution in the Republic of China, 1952–1979 (Boulder, CO, 1981), p. 75.Google Scholar
39 According to Ranis, loc. cit. p. 215, ‘government policy in the 1950s, supported by U.S. project aid allocations, was to maintain capacity well ahead of demand, to distribute it throughout the island, and perhaps most importantly, to aim for realistic (that is, no profit, no subsidy) overall pricing levels while maintaining a uniform set of rates as between rural and urban areas’.Google Scholar
40 Li, K. T., ‘The Growth of Private Industry in Free China’, in Industry of Free China (Taipei), 16, 1, 25 07 1961, p. 5. According to World Development Report, 1992, p. 117, the 1991 tariffs for electricity in ‘developing countries’, averaged U.S. $.04/kwh, and only covered some two-fifths of the cost of supply.Google Scholar
41 Lee, Kyu Sik and Anas, Alex, ‘Manufacturers’ Responses to Infrastructure Deficiencies in Nigeria’, World Bank Policy, Planning, and Research Staff, Report INU 50, Washington, 1989.Google Scholar
42 From Crisis to Sustainable Growth, p. 3.
43 Scott, Maurice, ‘Foreign Trade’, in Galenson (ed.), op. cit. p. 360.Google Scholar
44 Nash, op. cit. p. 40.
45 According to Bhattacharya, Amarendra and Linn, Johannes F., Trade and Industrial Policies in the Developing Countries of East Africa (Washington, DC, 1988), World Bank Discussion Paper No. 27, p xi, an inward-oriented trade régime is characterised by ‘controls, high and variable tariff protection and quantitative restrictions and administrative allocation’, while an outwardoriented régime ‘emphasizes linkages to the world economy through exports and enhanced import capacity’.Google Scholar
46 Levy, op. cit. p. 3.
47 Wade, op. cit. pp. 117 and 122.
48 Scott, loc. cit. p. 334, citing Lee, T. H. and Liang, K. S., ‘The Structure of Protection in Taiwan’, in Economic Essays (Taipei), 11 1971.Google Scholar
49 Gulhati, Ravi and Nallari, Raj, ‘Successful Stabilization and Recovery in Mauritius’, World Bank E.D.I. Development Policy Case Series, Washington, DC, 1990, p. 11, and From Crisis to Sustainable Growth, p. 116.Google Scholar
50 Erzan, R. H., Marchese, S., and Vosennar, R., ‘The Profile of Protection in Developing Countries’, undated Unctad Discussion Paper No. 21, New York, which calculated that countries in sub-Saharan Africa in the 1980s had the highest rate of import licence requirements, advanced import deposits, and Central Bank authorisation requirements, leading to the highest overall rate of non-tariff barriers among developing-country groups.Google Scholar
51 Simon, loc. cit. p. 143.
52 Gulhati and Nallari, op. cit. p. 55.
53 Biggs, Tyler A. and Levy, Brian, ‘Strategic Interventions and the Political Economy of Industrial Policy in Developing Countries’, Harvard E.E.P.A. Discussion Paper No. 23, October 1988.Google Scholar
54 Rodrik, loc. cit. p. 941.
55 Scott, loc. cit. p. 340. These lower rates, it must be emphasised, are still high in real terms compared with other industrialised countries.
56 Levy, op. cit. p. 4.
57 Nash, op. cit. p. 30.
58 Levy, op. cit. p. 6. Once exports were well developed and Taiwan began to run up against import barriers in its chief markets, the Government concentrated on upgrading the quality of exports within certain broad categories, providing incentives to firms to increase the value of their products but not the quantity. Gold, Thomas, State and Society in the Taiwan Miracle (Armonk, NY, 1986), p. 82.Google Scholar
59 ‘Comments’ by Findlay, Ron, in Hong, W. and Krause, L. B. (eds.), Trade and Growth of the Advanced Developing Countries in the Pacific Basin. Papers and Proceedings of the Eleventh Pacific Trade and Development Conference (Seoul, Korea Development Institute, 1981), p. 31,Google Scholar cited in Fransman, Martin, ‘Explaining the Success of the Asian NICs: incentives and technology’, in IDS Bulletin (Brighton), 15, 2, 04 1984, p. 53.Google Scholar
60 Rodrik, loc. cit.
61 Bräutigam, Deborah, ‘Regional Industrialisation in Eastern Nigeria’, Western Africa Department, The World Bank, Washington, DC, 1992,Google Scholar and Forrest, Tom, ‘The Advance of African Capital: the growth of Nigerian private enterprises’, in Stewart, Frances, Lall, Sanjaya, and Wangwe, Samuel (eds.), Alternative Development Strategies in Africa (London, 1992).Google Scholar
62 Private foreign investment between 1952 and 1961 averaged only U.S. $3 million a year, compared with foreign aid of some U.S. $67 million a year. In the period from 1962 to 1972, foreign investment averaged U.S. $134 million a year. Taiwan Statistical Data Book, 1989.Google Scholar
63 Ibid. 1975.
64 Scott, loc. cit. p. 333.
65 Interestingly, most of the technical co-operation projects approved in Taiwan (73 per cent) were between Japanese and Taiwanese companies, while U.S. firms tended to ‘remain insulated from domestic firms’, according to Ranis, op. cit. p. 251, indicating that the nationality of the foreign investor may make a difference in African countries.Google Scholar
66 North, Douglass C., Institutions, Institutional Change and Economic Performance (Cambridge, 1990).CrossRefGoogle Scholar
67 Wade, op. cit., and Alice Amsden, Asia's Next Giants South Korea and late industraialization (New York, 1989).
68 Chan, Steve, ‘State-Making and State-Breaking: the origins and paradoxes of the contemporary Taiwanese state’, in Greenberg, Edward S. and Mayer, Thomas F. (eds.), Changes in the State: causes and consequences (Newbury Park, CA, 1990), p. 143.Google Scholar
69 For example, the Industrial Development Bureau, with a staff of 180, appointed its first economist in 1981. K. Y. Yin, an electrical engineer, was the architect of Taiwan's economic reforms in the early 1960s. K. T. Li, Minister of Economic Affairs, 1965–9, and Minister of Finance, 1969–76, was a physicist. In fact, 11 of the country's 14 previous Ministers of Economic Affairs have been scientists or engineers. Wade, op. cit. pp. 203 and 219.Google Scholar
70 Little, loc. cit. p. 504. This indicates that in developing capacity to support industrial development, African governments might invest more in training engineers than neo-classical economists!
71 Rodrik, loc. cit. p. 933.
72 Ibid.
73 Findlay, loc. cit.