Taiwan's Economic Miracle

The Taiwan Miracle (Chinese: 台灣奇蹟 or 臺灣奇蹟; pinyin: Táiwān Qíjì) or Taiwan Economic Miracle refers to the rapid industrialization and economic growth of Taiwan during the latter half of the twentieth century. As it has developed alongside Singapore, South Korea and Hong Kong, Taiwan became known as one of the "Four Asian Tigers".

After a period of hyperinflation in the late 1940s when the Kuomintang (KMT) military regime of Chen Yi overprinted the new Taiwan Yuan against the previous Japan Taiwan Yen, it became clear that a new and stable currency was needed. When the KMT government retreated to Taiwan after the loss of mainland China in the Chinese Civil War, it brought part of the precious metal and foreign currency reserve of mainland China to the island. Although war-ravaged China had held only a very small reserve, some $170 million in all, those reserves helped to establish a gold-standard reserve currency in Taiwan, which in turn helped to stabilize prices and reduce hyperinflation. More importantly, many of the Chinese intellectual and business elites moved with KMT to the island. The Japanese had built up the agricultural and industrial infrastructure as well as chemical, material, and food reserves on the island that allowed the elite of the KMT supporters to jump start their own economic endeavors. Along with the $4 billion in financial aid and soft credit provided by the US (as well as the indirect economic stimulus of US food and military aid) over the 1945-1965 period, Taiwan had the necessary capital to restart its economy. Further, the KMT government instituted many laws and land reforms that it had never effectively enacted on mainland China.

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