How Economic Ideas Led to Taiwan’s Shift to Export Promotion in the 1950s

Douglas Irwin

No 29298, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Taiwan was perhaps the first developing country to adopt an export-oriented trade strategy after World War II. The factors usually associated with big shifts in policy—a macroeconomic crisis, a change in political power or institutions, lobbying by export interests, pressure from international financial institutions—were not present; it was ideas that were key. In 1954, economist S. C. Tsiang proposed that Taiwan boost export earnings rather than squeeze import spending to deal with its chronic shortage of foreign exchange. He recommended a currency devaluation to establish a realistic exchange rate and a market-based system of foreign exchange allocation to end the inefficient rationing by the government. Four years later, a leading policymaker, K. Y. Yin, fought for the adoption of Tsiang’s proposal, helping clear the way for Taiwan’s phenomenal growth in trade.

JEL-codes: F13 F31 N75 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-his, nep-hpe and nep-int
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