The Political Logic of Economic Liberalization in Taiwan: The Transformation of Party-state Capitalism and the Reconstruction of State-business Relations





Published date: 

June, 2008


Tieh-chih Chang


Taiwan has since the 1980s gone through a dramatic dual transformation, i.e., political democratization and economic liberalization. However, while the economic liberalization, such as market opening and privatization, has transformed Taiwan’s political economy in the 1990s, the political implications have seldom been noticed. I argue that the political logic of Taiwan’s economic liberalization in the 1990s is that, as in some other countries, many new opportunities and profits were distributed to politically powerful allies, thus helping the ruling party rebuild its coalition with capitalists. However, what made Taiwan’s case different from those of other countries is that the ruling party was the biggest winner as a result of the economic liberalization. It not only expanded its enormous party business by taking over the newly-liberalized resources, but was also able to further co-opt and patronize key business groups by using its unique political and market power.