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This research examines the international trade of Taiwan. In the conduct of this examination, the country's economic structure and development, and its international political position are also examined.

TAIWAN'S ECONOMIC STRUCTURE AND DEVELOPMENT

The Republic of China, typically referred to as either Nationalist China or Taiwan in the west, is one of the world's most rapidly developing economies (The World Bank, 1990). Taiwan pursued economic growth in the 1970s and 1980s primarily through the development of its export trade, and that the country continues this approach in 1990 (Paxton, 1990). While Taiwan sought external capital for its economic development during this time period, the country typically dissuaded direct foreign investment (Anderson, 1983).

In addition to dissuading direct foreign investment, Taiwan also, to a great extent, closed its domestic markets to foreign manufacturers (Boyd, 1986). The dissuading of direct foreign investment, the relatively closed domestic markets, and the growth of the Taiwanese economy combined to create a capital problem for the country in the mid1980s, as available loan capital was insufficient to meet the demands of the rapidly

1 2growing economy, while the country's protectionist policies discouraged foreign investment. Capital scarcity, thus, threatened the continued rapid development of the Taiwanese economy.

Taiwan has a market economy. The Taiwanese government, however, acts to protect local producers from foreign competition, and generally exercises a more interventionist role in the country's economy than that which occurs in the United States. In this context, the relationship between the Taiwanese government and the economy's private sector follows much more closely the Japanese model than it does the American model.

Among the nonindustrialized economies within the Pacific Basin, Taiwan is one of the f...