Taiwan's economic development experience has been called a "miracle": a transformation from the civil war-ravaged island economy of a government-in-exile in 1949 - to the 20th largest economy in the world less than five decades later. Along the way Taiwan, officially the Republic of China, has actually descended on the diplomatic scale; in 1949 it was the United Nations-recognized "official" government of the entire Chinese people, but since 1971, when the People's Republic of China in Beijing was voted into the U.N., Taiwan has been a diplomatic nonentity to the majority of world governments. The island's miracle, then, is two-fold: growth from the wreckage of physical disaster, prosperity from the ashes of diplomatic failure.
Miracles, in the real world, have tangible causes. Taiwan's double-rebound is the result of developments and adaptations that enabled its economy to overcome what should have been debilitating adversities. It is the contention of this paper that foreign trade is the key to Taiwan's success: there is a direct relationship between Taiwan's economic development and its emergence as the 13th largest trading nation in the world - with a surplus of US$10 billion*. To support this contention, this essay will examine closely the role foreign trade plays in Taiwan's economy. There will be three general areas of focus. In the first section, attention will be given to an overview of Taiwan's economic experience, with a general concentration upon developments since the 1971 diplomatic disenfranchisement. Part two of this examination will look at some of the specifics of Taiwan's foreign trade profile, including the history of foreign trade per se and the role that foreign trade plays in the domestic economy. The third direction of focus will be on the Taiwanese policies relating to the export sector of its economy - and the very important relationship between mainland China and Taiwan vis-a-vis their mutua...