The following article was a cover story for this month’s issue of Taiwan Business Topics, the magazine of the American Chamber of Commerce in Taiwan:
Small and medium-sized enterprises (SMEs), which represent 99% of all enterprises in Taiwan, have been cited as a linchpin to the country’s rapid post-war development. Yet SMEs across the island now face challenges that the pioneering generations could not have envisaged. How these are tackled will be key to whether SMEs remain a driver of economic growth.
The historical circumstances behind Taiwan’s SME success are a topic of debate. While the country’s post-war economic development followed a similar trajectory to that of South Korea, with both governments initially relying on import substitution policies, trade protection, and repression of financial markets, the approaches diverged with the transition to export-led growth. As South Korea gravitated toward a chaebol (large conglomerate) model, Taiwan maintained a “small is beautiful” philosophy. The Kuomintang government’s inheritance of industrial monopolies from the Japanese colonial regime is seen as one reason for the reluctance to foster larger private enterprises that might have posed competition for the state-owned corporations. Whatever the reasons, SMEs had space to grow.
To read the full article, click here.
