The nation rose to be as rich as Japan, South Korea, Hong Kong, and Singapore.

Data from the International Monetary Fund IMF says that the gross domestic product, GDP, per capita of Taiwan grew from $2,370 in 1980 to over $32,440 by 2023.

But most people don't really understand how Taiwan got to where it is today.

They know how South Korea became rich.

It was an economy driven by its electronics sector, which drove billions of exports through companies like Samsung and Hyundai.

People know how rich Japan is.

They relied heavily on their automobile and electronics industries, with giants like Toyota and Sony leading the way.

Both Hong Kong and Singapore got to where it is today as they became the world's global financial hub.

Hong Kong, specifically, became the gateway to China.

But how about Taiwan?

How did Taiwan get to where it is today?

Well, Taiwan's path to becoming one of Asia's economic success stories is because of several strategic planning and an industrial revolution that only a few received in Asia in the 20th century.

Prior to this era of economic growth, however, the island has played a major role as a trading hub under Dutch rule in the 1600s.

By Japanese colonialism, Taiwan had undergone further economic development.

This period of Japanese colonialism played an important role in Taiwan.

Although, this wasn't always seen as a good thing.

Colonialism traditionally brings connotations of oppression and economic extraction.

But Japan, as many historians argued, had several lasting positive effects on the island's infrastructure, economy, education system, and public health.

These foundational changes were instrumental in Taiwan's post-World War II economic miracle, which propelled the country to modern economic success.

When Japan took control of Taiwan following the First Sino-Japanese War in 1895, the island's infrastructure was underdeveloped, with poor transportation networks and little industrial capacity.

The Japanese quickly sought to transform Taiwan into a productive colony that could serve as an agricultural hub for Japan.

They initiated the railway system in 1899, which connected the northern and southern parts of the island and allowed for the more efficient movement of goods and people.

By the 1930s, Taiwan had an extensive railway network, which contributed to the integration of local markets and the expansion of export-oriented agriculture.

Japan also undertook efforts to modernize cities like Taipei and Kaohsiung.

Japanese-style urban planning was introduced, with a focus on sanitation, clean water supply, and organized city layouts.

As a result, Taiwan's cities began to develop modern amenities that contributed to improved living standards for urban populations.

Another significant role that Japan implemented was shifting Taiwan's economy from subsistence farming to a more market-oriented agricultural economy, with a focus on producing cash crops for export to Japan.

The Japanese colonial administration viewed Taiwan as an agricultural appendage to the Japanese Empire, and thus, they invested in increasing Taiwan's agricultural productivity.

This led to an agricultural revolution, and by the 1930s, rice had become a major export crop, with approximately 45% of Taiwan's rice harvest being exported to Japan.

As a result of all these, public health has improved.

In 1906, life expectancy at birth was approximately 29 years for females.

By the late 1930s, it had increased to 45 years.

Over the same period, the overall mortality rate dropped from 33.4 per 1,000 people in 1906 to 18.5 per 1,000 in 1936.

This sharp decline in mortality rates was largely due to better sanitation, disease control, and the introduction of modern healthcare services.

The Japanese colonialism in Taiwan is a story that requires far more understanding.

But we'll leave it for now, and move on to the second stage of how Taiwan got rich.

Soon after the Second World War, a nationalist government led by General Chiang Kai-shek retreated to Taiwan following its defeat in the Chinese Civil War.

While Japanese colonial rule had left the island economically prosperous, it still had complex challenges when the nationalist government arrived.

The island saw an influx of soldiers and refugees from mainland China.

This, and among others, had caused hyperinflation, high levels of poverty, and a severe shortage of foreign exchange.

During this period, Taiwan was highly dependent on foreign aid, which specifically was the United States.

This aid was crucial for Taiwan's survival in the immediate post-war years.

But relying on a foreign power for long-term economic stability was not sustainable.

This led the nationalist government to create economic policies that require heavy state intervention, with tight controls over trade, rationing of foreign exchange, and a system of multiple exchange rates.

Then, the government also imposed strict import controls to ensure that they won't run out of foreign exchange reserves.

But despite these efforts, Taiwan's exports accounted for less than 10% of its GDP during the 1950s.

A major turning point to fix all of these was in the mid-1950s.

Policymakers were advocating for export promotion, and one of the key figures behind this shift was the economist S.

C.

Tsiang, who proposed a radical departure from the import substitution strategy commonly pursued by developing nations at the time.

Tsiang argued that Taiwan should focus on boosting export earnings rather than continuously rationing foreign exchange and limiting imports.

To put it simply, to shift Taiwan's focus from merely surviving through protective import policies to actively engaging in global trade by becoming an export-driven economy.

Tsiang's ideas were embraced by a key policymaker, K.

Y.

Yin, who was appointed to head Taiwan's development initiatives in 1958.

The country then implemented a series of bold economic reforms.

The government devalued the new Taiwan dollar, moving away from an overvalued currency that had stifled exports for years.

In addition, the multiple exchange rate system, which had created distortions in the allocation of foreign exchange, was replaced with a more unified and market-oriented system.

Exporters were now allowed to keep or sell their foreign exchange earnings, which provided a powerful incentive for them to increase exports.

The effects of these reforms were immediate and profound.

Taiwan exports began to grow rapidly, and the country quickly became a major exporter of labor-intensive goods.

The textile industry, for example, grew dramatically, with textile exports increasing from $2 million in 1957 to $29 million by 1962.

Similarly, the electronics sector began to take off, setting the stage for Taiwan's eventual dominance in the high-tech sector.

By the 1960s, Taiwan's economy was growing at an unprecedented rate, and the island became known as one of Asia's Four Tigers, along with South Korea, Hong Kong, and Singapore.

The 1958 reforms led not only for Taiwan's exports to rise, but also allowed the country in the 1970s to become one of the world's leading exporters of electronics, textiles, and other manufactured goods.

The government even further liberalized trade by reducing tariffs and removing remaining import restrictions.

These reforms led to Taiwan creating its own set of conglomerates.

But initially, it wasn't large businesses like that of South Korea and Japan.

Taiwan's growth, however, was driven largely by small and medium-sized enterprises, SMEs.

These enterprises accounted for over 60% of Taiwan's exports between 1981 and 1985 and were responsible for over half of the nation's total production value during the same period.

But as years passed by, Taiwan went on to create their own large conglomerates that would also contribute a large proportion of its economy.

This was seen in the country's high-tech manufacturing and the semiconductor revolution.

It started when Taiwan's government had invested heavily in high-tech industries during the 1970s and 1980s.

An institute known as the Industrial Technology Research Institute, ITRI, was established in 1973 to promote research and became the cornerstone of Taiwan's economic growth.

In 1987, the government supported the creation of Taiwan Semiconductor Manufacturing Company, TSMC, which would go on to become the world's largest dedicated independent semiconductor foundry.

TSMC's success not only solidified Taiwan's position as a global leader in the semiconductor industry, but also attracted other high-tech companies to the island, creating a robust ecosystem of innovation and manufacturing.

But TSMC has not only made Taiwan important to itself, but to the rest of the world.

As the world's largest independent semiconductor foundry, countries from the United States to The US.

Commerce Secretary Gina Raimondo had once warned that a Chinese invasion of Taiwan and a potential takeover of TSMC, the world's leading semiconductor manufacturer, would be absolutely devastating to the US economy.

Raimondo noted that 92% of its advanced chips are sourced from TSMC.

This makes Taiwan very important to the US, so Taiwan's rise as a small island to one of the world's most important countries is a result of many historical factors stretching as far back to the Dutch rule, and then followed by the Japanese colonialism.

But anyway, do let us know what you think.

Thanks for watching.