Essay Database

Taiwan is an example of successful economic development through pursing import substitution. Taiwan successfully avoided many of the pitfalls which countries trying to develop their export products typically fall into. The typical process for developing an industry for import substitution is to identify an industry where there may be a comparative advantage, erecting protective barriers, stimulating the development of that industry, and then removing the protective barriers once the industry can be competitive. Taiwan's success …

…by implementing protective barriers and removing them after a reasonable amount of time had lapse for the industry to become competitive. Taiwan avoided the pitfalls of potentially developing an industry where it did not have a comparative advantage, or developing inefficient industries dependent on protection. The successful exporting of consumer goods allowed Taiwan to build a capital stock of its own to finance the more capital intensive technology industry for which it is known today.