Since for an underdeveloped country to achieve economic take-off largely by its own efforts has often been compared to the feat of lifting oneself up by one’s own bootstraps, it is therefore advantageous to investigate the successful experience of Taiwan for the reference of other developing countries still struggling to break free from their poverty traps.
In this paper we have examined the remarkable experience in Taiwan of economic growth with equitable income distribution. The chief explanation for this performance is found in the twin pillars of Taiwan’s development strategy: One is the adoption of a trade liberalization and export promotion policy after proper adjustment of the exchange rate; and the other is the employment of a market-determined interest rate to ensure the maximization of voluntary savings and the efficient allocation of available capital funds.
