In 1950, when experts in international relations were asked to name new or soon-to-be-new nations that would in fairly short order achieve economic success and political maturity, and perhaps serve as a model for other emerging nations, they usually suggested countries like Nigeria and Kenya in Africa, Indonesia and Malaysia in Asia, Argentina and El Salvador in Latin America. Not to be found on anyone's list was the Republic of China (ROC).
In fact, most of the U.S. academic community dismissed the Nationalist Chinese, who had decisively lost the civil war to the Chinese communists on the mainland and had set up a lonely government-in-exile on the island of Taiwan, as a regime that was bound to fail. They urged the State Department to recognize reality and the People's Republic of China (PRC).
However, when North Korean troops, armed and encouraged by the Soviet Union, invaded South Korea, their unprovoked aggression forced a reappraisal of U.S. strategic interests in Asia, including the future of the ROC. We decided that it was important to keep the island out of communist hands and instituted a program of military and economic aid as part of our grad strategy of containment. Our intentions were overwhelmingly strategic, although some diplomats and members of Congress also saw the wisdom of supporting a noncommunist Chinese alternative to Mao Zedong.
What no one envisioned was that the U.S. decision would help make possible the creation of an economic and political model for the Third World.
Today, while Nigeria is still struggling to realize its unquestioned potential, Indonesia is characterized by one of the world's widest gaps between its rich and its poor, and El Salvador must depend on U.S. assistance to feed its citizens and fight a civil war, the ROC enjoys an economic prosperity that has earned the envy of the developing world and the attention of the developed.
Last year, for example, the ROC's per capita GNP was $7,518, placing it behind only Japan and Singapore in Asia and above such Western European nations as Portugal. If its economic performance in the next decade is as good as that of the last decade, the ROC's per capita GNP in the year 2000 will be $20,000, placing it solidly in the ranks of the developed nations.
Its two-way trade in 1989 was $118.5 billion, making the ROC the world's 12th largest trading nation; it enjoyed a global trade surplus of $6.5 billion. The ROC's foreign exchange reserves have surged to an amazing $75 billion, second only to Japan in the world. And yet, the income distribution ration between the top and the bottom levels of society is only 4.7 percent, compared with 5.1 percent in West Germany, 7.5 percent in the United States, and 8.1 percent in South Korea.
How has the ROC climbed the ladder of economic development over the last 40 years? As outlined by Susan S. Chang of the ROC's Council for Economic Planning can Development, there have been three stages:
1. From 1949 to 1965, there was a period of dependence on foreign aid, $1.4 billion of it from the United States. In the beginning, the ROC faced the usual problems of a resource-poor developing country: widespread poverty,
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