Ethnic Identity Politics and the Transformation of the Developmental State: Industrial Structure, Democratic Transition, and Policy Constraints in Taiwan

Numerous studies have examined the transformation of the Taiwanese developmental state. This paper argues that Taiwan’s ethnic identity politics have produced lingering effects on the state’s transformation process. In particular, recent changes to the developmental state can be traced back to Taiwan’s ethnic identity politics at three different stages. First, the state’s developmental strategy shaped by the Kuomintang Party’s (KMT) mainland identity affected Taiwan’s post-war industrial structure as was formed between the 1950s and 1970s, which in turn affected the level of policy constraints generated by business and labor actors. Second, the rise of a Taiwanese identity in the 1970s facilitated Taiwan’s democratic transition in 1986, which transformed the political foundation of the state’s economic policy-making. Third, the subsequent democratic bipartisan politics triggered by two competing national identities (i.e. Chinese and Taiwanese) further transformed the political environment in which the state’s economic decision-making occurred from the early-2000s onwards.