Taiwan's quick industrialization and rapid growth during the latter half of the 20th century has been called the "Taiwan Miracle" (台灣奇蹟) or "Taiwan Economic Miracle". As Taiwan has developed alongside Singapore, South Korea, and Hong Kong, they are collectively known as the "Four Asian Dragons" (or "Four Asian Tigers").
Japanese rule prior to and during World War II brought changes in the public and private sectors, most notably in the area of public works, which enabled rapid communications and facilitated transport throughout much of the island. The Japanese also improved public education and made it compulsory for all Taiwanese citizens.
When the KMT government fled to Taiwan it brought the entire gold reserve and the foreign currency reserve of mainland China to the island, which stabilized prices and reduced hyperinflation. More importantly, as part of its retreat to Taiwan, the KMT brought the intellectual and business elites from mainland China. The KMT government instituted many laws and land reforms that it had never effectively enacted on mainland China. The government also implemented a policy of import-substitution, attempting to produce imported goods domestically. Much of this was made possible through US economic aid, subsidizing the higher cost of domestic production.
In 1962, Taiwan had a per-capita gross national product (GNP) of $170, placing its economy on a par with those of Zaire and Congo. By 2008 per-capita GNP, adjusted for purchasing power parity (PPP), had risen to $33,000, contributing to a Human Development Index equivalent to that of other developed countries. Taiwan's HDI in 2007 is 0,943 (25th, very high), and stands at 0,868 in 2010 (18e, very high), according to the UN's new calculating method ("Inequality-adjusted HDI").
Today Taiwan has a dynamic, capitalist, export-driven economy with gradually decreasing state involvement in investment and foreign trade. Some large government-owned banks and industrial firms are being privatized. Real annual growth in GDP has averaged about eight percent during the past three decades. Exports have provided the primary impetus for industrialization. The trade surplus is substantial, and foreign reserves are the world's fifth largest as of 31 December 2007.
Taiwan’s total trade in 2010 reached an all-time high of US$526.04 billion, according to Taiwan's Ministry of Finance. Both exports and imports for the year reached record levels, totaling US$274.64 billion and US$251.4 billion, respectively.
Agriculture constitutes only two percent of the GDP, down from 35 percent in 1952. Since the 1980s traditional labor-intensive industries have steadily been moved offshore and with capital and technology-intensive industries replacing them. High-technology industrial parks have sprung up in every region in Taiwan. Taiwan has become a major foreign investor in mainland China, Thailand, Indonesia, the Philippines, Malaysia, and Vietnam. As of the end of 2003, it is estimated that some 50,000 Taiwanese businesses and 1,000,000 businesspeople and their dependents are established in the PRC.
Because of its conservative financial approach and its entrepreneurial strengths, Taiwan suffered little compared with many of its neighbors from the 1997 Asian Financial Crisis. Unlike its neighbors South Korea and Japan, the Taiwanese economy is dominated by small and medium-sized businesses rather than large business groups. The global economic downturn, however, combined with increasing bad debts in the banking system, pushed Taiwan into recession in 2001, the first whole year of negative growth since 1947. Due to the relocation of many manufacturing and labor-intensive industries to mainland China, unemployment also reached a level not seen since the 1973 oil crisis. This became a major issue in the 2004 presidential election. Growth averaged more than 4% in the 2002–2006 period and the unemployment rate fell below 4%. Since the global financial crisis starting with United States in 2007, the unemployment rate has risen to over 5.9% and Economic Growth fallen to -2.9%. However, Taiwan managed to move out of the crisis in very good shape. In 2010, economic growth topped 10%, the highest rate in almost 30 years; international trade jumped more than 39% to US$526.04 billion; and the job market has turned a rosy picture with most businesses set to recruit. As a result, IMF estimated Taiwan's 2010 GDP-PPP at over US$34700, surpassing that of Finland, France and Japan all at once.Leading technologies of Taiwan include:
Bicycle manufacturing, ex: Giant Bicycles, Merida
Communication & Network, ex: D-Link
Laptops and other computers and displays, ex: Acer, Asus, BenQ
Shipping, ex: Evergreen
Semiconductor device fabrication, TSMC
Smartphones, ex: HTC
TFT-LCD, ex: Chimei InnoLux Corporation, AU Optronics