State policy and industrial promotion in Taiwan: an interrupted time series analysis, 1956-1994

Over the past decade, the statist perspective has been popular in interpreting the economic success of the East Asian countries. Proponents of this perspective discredit the neoclassical view that market forces alone were the most important dynamic behind these economic achievements. Instead, they credit the state as the key factor of East Asian economic success. This study employs an interrupted time series analysis to examine the validity of the statist perspective on Taiwan's industrial promotion policy. The results suggest that the government of Taiwan has been successful in upgrading the island's industrial structure. This finding supports the statist perspective on development. It does not, however, deny the utility of the neoclassical view since market forces also contributed to the growth of Taiwan's industrial structure.