Taiwan as a Part of Japanese Companies’ Economic Strategy in East Asia

Abstract

The article reveals the role of Taiwan as an integral part of Japanese companies’ foreign economic strategy in East Asia. Starting with characteristic features of the whole region and its separate economies, the author shows how the Taiwanese economy has been developing after the war and explains why this island took a special position among Japan’s economic partners. The first part of the article examines the main stages of Taiwan’s economic development after the war, revealing the factors of its successful modernization, and explains historical reasons for shaping favorable conditions for its turning into the object of expansion of Japanese companies. In the second part of the article, the author analyzes the process of the consistently increasing economic activity of Japanese companies in East Asia and shows the details of Taiwan’s entry into the existing system of division of labor in the region. A special emphasis is made on the characteristics of the economic cooperation model between the countries of the region, changes in the industrial structure of FDI, and specific forms of partnership between Japanese and Taiwanese companies. In the third part, the author draws attention to the economic and political factors which may lead to instability of economic ties and influence international capital flows. The author comes to the conclusion that Taiwan played an indispensable role in the expansion of the Japanese companies’ economic strategy and occupies now a strong position in the high-end segment of Japan’s foreign production base. Despite the destabilizing factors, Taiwan will evidently keep its exceptional position in the economic interests of Japanese companies in East Asia.

Keywords

• foreign direct investment
• international capital flows
• east asia
• division of labor
• value chains
• taiwanese economy
• japanese economy
• japan-taiwan relations