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Dependent development and income distribution in Taiwan, 1965-1990
Abstract
Between 1965 and 1980, Taiwan's labor-intensive, export-oriented economy grew rapidly and yet retained relative income equality. This situation is contradictory to both modernization and dependency theories of the link between economic growth and income distribution. The hypothesis of this research is that low disarticulation is a key reason for Taiwan's income equality. Disarticulation refers to the juxtaposition of economic sectors with different levels of development and productivity. In many peripheral countries, the most advanced economic sectors are controlled by multinationals and aimed at an export market. Thus, production and consumption of the leading sectors are often not for the domestic market. This is one reason peripheral governments tend to be inactive in stimulating social consumption and also relatively weak in their control over economic growth policies. The Taiwan case partly fits this model of peripheral development, in the sense that they are highly active economically, but inactive in shaping social policy. Taiwan's political economy was shaped by historical factors (Japanese colonialism, U.S. aid, the external regime, etc.), and also by the state's active intervention in economic activities. However, welfare policies were ignored by the government. The government implicitly permitted employers to exploit labor in the interest of export income. As a result, individual families rather than the state or employers had the responsibility of providing protection for their members. People living on low wages had to adopt several strategies to afford a family. The relative income equality which developed was the result of both self-exploitation within a family and mutual exploitation among low-income families. Recent signs of a shift towards greater income inequality in the 1980s may be attributed to two factors. First, the previous mechanism of creating income equality through a combination of agricultural and industrial income for most families has largely ceased. Second, financial liberalization has promoted a process of redistribution of power, wealth, and income. In this process, capital has tended to become more concentrated, while financial regulations are poorly established, generating a growing problem of income inequality. On the other hand, as domestic consumption becomes of greater importance, welfare policies have started to improve as well.
Subject Area
Social structure|Labor relations|Public policy|Economics
Recommended Citation
Chen, Yeu-Ching C, "Dependent development and income distribution in Taiwan, 1965-1990" (1993). Doctoral Dissertations Available from Proquest. AAI9408262.
https://scholarworks.umass.edu/dissertations/AAI9408262