Agricultural and industrial development in Taiwan.

Over the past four decades Taiwan's economy has experienced significant structural change. At the outset of this period, Taiwan was just recovering from the ravages of World War II, and the economy was heavily dominated by the agricultural sector, which accounted for one-third of the net domestic product, more than half (56 percent) of total employment, and 92 percent of total exports. By 1988 agriculture's share of the net domestic product (NDP) had dropped to 6 percent, its share of total employment was down to 13.7 percent, and the sector accounted for only 6.1 percent of the total exports, including processed foods. These were years of high and stable economic growth: the real gross national product (GNP) grew at an average rate of 8.8 percent from 1952 to 1989, and two oil crises of the 1970s seemed to have little negative impact.' Between 1952 and 1987, per capita GNP, at 1981 constant prices, increased more than seven times, for an annual increase of 6.2 percent. In view of this growth, Taiwan is likely to be classified as an industrial economy by the turn of the century (Klein 1986). In the period since 1952, Taiwan's economy has also become increasingly dependent on trade. Total trade as a percentage of gross domestic product at current prices grew at a steady pace, from an average of 24.6 percent in the 1950s to 101 percent in the 1980s. Since 1970 the trade balance has been positive except for 1974,1975, and 1980, when Taiwan was hit by the oil crises and economic recession. Taiwan has exported more than half of its GNP since 1978, and its trade surplus was equivalent to 9 percent of GNP in the 1980s. The impact of high economic growth on the distribution of wealth has been equally impressive. The ratio of the income of the highest fifth of households to that of the lowest fifth was less than 5 during the 1970s and 1980s. This ratio is comparable to the rates recorded by Japan and some European countries, whose income distribution is the most equitable in the world.