Constructing a Quality Regime: The Origins of Taiwan's Export-Led Capitalism

Two key features of East Asian capitalism are the predominant involvement of the state in the economy and success via “export building”. This paper revisits one of the original successful tigers, Taiwan, by examining the mechanisms of state involvement and the processes of integration into the world market at the firm level. The conventional explanation of East Asian development focuses on the state capacities in shifting to export-led industrialization (in contrast to the lack of such state capabilities in Latin America and India) and the emphasis on industrial policies to induce entrepreneurship. A direct implication of this interpretation is that when the state intervenes, it tends to produce large firms and encourage industrial concentration. Yet, the Taiwanese SMEs as key exporters has run against the evidence elsewhere. If export-led development is an important element in understanding East Asian capitalism, and if the state-centric thesis is to have any explanatory power, we need to show how the East Asian states escort firms in the world market. Specifically, how has Taiwan, as an example, coordinated a system of SMEs in its quest for integration into the global economy?

Through in-depth case studies of the 1970s key export industries, this paper illustrates the patterns and ways in which the Taiwanese state coordinated and interacted with the decentralized SMEs. The linkages between the state and SMEs were through varieties of technology and export promotion programs carried out by various kinds of semi-governmental organizations with an emphasis on technical standardization (at the firm level) and ensuring quality control. These measures were crucial in overcoming export barriers and establishing economies of trust, and they had an impact on the formation and patterns of firms’ subsequent technological learning.

This reinterpretation of Taiwan’s post-war experience is relevant to debates on models of Asian capitalism(s).