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Public Sector Vs.
Private Sector
The public sector was a major force in Taiwan's economy during
the 1950s. During the 1980s and 1990s, it has capitulated to the
private sector. In 1959, the private sector was responsible for
51.3% of industrial production, but by 1988, it had strengthened
its dominance to 81.9%. Government involvement in Taiwan's economy
has therefore gradually weakened since the 1950s.
Although not as involved in Taiwan's economy as during the initial
phases of economic development, the KMT government still controls
directly 'strategically important' industries. In total, the government
controls 27 national corporations with the largest 12 operating
under the supervision of the Ministry of Economic Affairs (MOEA).
The largest ranking corporations are the China Petroleum Company,
China Steel, China Shipbuilding and Tai-Power. The Taiwan provincial
government also controls 33 enterprises including the Taiwan Wine
and Tobacco Monopoly Bureau, as well as 11 major commercial banks.
The problem with determining the exact amount of KMT government
involvement in Taiwan's economy, is the government's treatment of
state-owned corporations as privately owned. This makes it very
difficult to determine exactly what proportion in Taiwan's economy
the private sector constitutes. Nevertheless, such statistics do
indicate that since the 1950s, there has been marked growth in private
sector production and is of prime importance in Taiwan's economy
today.
Despite less direct involvement in Taiwan's economy, the KMT has
not forfeited its authority in economic planning. The government
has played a key role in the shaping of the Taiwanese economy since
its retreat from the mainland, and still continues to do so. Taking
the form of economic plans that may vary in length, the government
decides which industries to promote, and when to fine-tune the economy.
Past economic plans have dictated the development phases from import
substitution policies in the 1950s, to export promotion policies
in the 1960s, concentration on petrochemicals and other heavy industries
in the 1970s, and the promotion of research and development in high-tech
industries during the 1980s. Besides these general strategies, the
government has also invested heavily in industries that the private
sector believes too risky and has also steered changes in Taiwan's
economy by providing preferential loans, tax incentives, tariff
duty and trade restrictions, regulation of exchange rates and finally
the implementation of liberalisation policies.
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