The island nation of Taiwan produces some of the world’s most advanced technology, commands a robust industrial system, and is governed by efficient state institutions. Moreover, it has succeeded in leveraging information technology and citizen participation into a uniquely successful system of “digital democracy,” most recently credited with containing COVID-19 in Taiwan. This is thanks to a legacy of innovation in response to geopolitical imperatives, namely the threat posed by mainland China. While past success does not guarantee future results, and key challenges loom, Taiwan remains one of the most functional polities in the world.
In 2020, Taiwan attracted international praise for its extremely effective response to the COVID-19 pandemic: the country suffered only seven COVID deaths in total that year and quickly restored normalcy to daily life, while much of the rest of the world was still in lockdown. Taiwan’s success drew plaudits for its unprecedented governance techniques that blended technology with democratic decentralization, with some commentators citing the nation as a model for the West to emulate. But Taiwan’s success in this regard was not a fluke. Rather, these capacities come from the Taiwanese government’s long-standing open-mindedness to reinventing its governmental institutions and overall strategic posture based on the capabilities made possible by the latest advances in technology.
Globally, there is a widespread perception that Taiwan punches above its weight, whether it’s in the realms of technology, industry, or innovations in governance. This perception is largely true for one simple reason: it has to. Located off of the southeastern coast of mainland China, the democratic and de facto independent country is a key Western ally and a thorn in the side of the Chinese Communist Party, which has continued to officially claim Taiwan as a renegade province of mainland China, ever since Taiwan as we know it was founded by the losing side of the Chinese Civil War in 1949. With a population and economy just a fraction the size of the People’s Republic of China (PRC), Taiwan’s government has always known that its continued independent existence would depend on superior strategy, with economic development, technological innovation, and institutional flexibility forming the core of such a strategy.
Throughout the 20th century, the Taiwanese government undertook conscious efforts to build an indigenous industrial base, and then an indigenous “Silicon Valley” on top of it, in an effort to imitate the best parts of the West. These efforts, ironically, have now surpassed the West itself and have also resulted in a high-trust, highly technically literate government and society that are capable of applying the same open-minded and strategic thinking necessary for foreign policy to domestic issues as well.
Digital and Democratic Government
Taiwan was one of the first countries in the world to detect and respond to the burgeoning pandemic, in part thanks to a senior government health official reading a highly-upvoted post on Taiwan’s largest online message board about a new disease spreading from China. This might be a funny anecdote in other contexts, but in Taiwan, this detail is emblematic of the reasons Taiwan’s pandemic response was so abnormally effective compared to most other countries. It was not only the government’s response that deserves credit for the country’s success on COVID, but rather the productive interactions between centralized state institutions and civil society at large, where the state develops centralized systems for decentralized, public use, and conversely pays attention to and confers legitimacy on useful initiatives and information provided by ordinary people without government titles.
In addition to news and information about COVID-19 rapidly spreading through the Taiwanese internet being monitored by both ordinary citizens and government officials alike, “civic hackers” quickly built tools in collaboration with the government to help people avoid infection and prepare for the pandemic, such as live infection maps and bots to combat misinformation about the virus. Both existing centralized efforts, such as integration of national health insurance data with customs and immigration institutions, online reporting of personal data, and the establishment of a national Command Center for disease control, as well as quickly-developed new ones, such as cell phone tracking, ramping up mask production, and quarantine procedures, all proved to be decisive—but only with the voluntary, informed, and enthusiastic participation of a digitally-active public that both trusted government measures and had also previously lived through a pandemic when SARS struck the nation more than a decade earlier, and remembered crucial lessons such as the importance of face masks. All of these factors combined to power Taiwan’s success. In the West, including the United States, even though some similar actions were undertaken such as building online monitoring tools, there was no baseline of social trust and institutional capacity to put such tools to use.
The most prominent civic hackers in Taiwan are organized around the “g0v” program, headed by Taiwanese Digital Minister Audrey Tang. The g0v program has its origins in 2012, when Taiwanese technologists and hackers dissatisfied with the government’s own efforts to set up new digital infrastructure decided to simply build it themselves. One of the earliest hackathons that led to the creation of g0v was named the “0th Hackathon of Martial Mobilization,” in a direct reference to Taiwan’s 38-year-long imposition of martial law from 1949 to 1987 intended to organize the entire country against any possible threat from mainland China. Perhaps living memory of such geopolitical pressures, combined with a high-trust democratic culture, contributed to Taiwanese technologists’ civic mindset, which contrasts sharply with the more detached, apolitical, and market-oriented value system of Western technologists.
Audrey Tang herself had worked in Silicon Valley and was a major open-source software contributor, including to the g0v program, prior to getting involved in Taiwanese politics. She was one of the activists who stormed and occupied Taiwan’s parliament in 2014 as part of the “Sunflower Student Movement,” which demanded greater transparency about a proposed trade deal with mainland China that critics argued would leave Taiwan vulnerable to political pressure from Beijing. Rather than shut out and oppose these confrontational, yet broadly aligned grassroots movements, the Taiwanese government decided to integrate them into the official government structure. A self-described anarchist, Audrey Tang was nonetheless first hired as a consultant to the Taiwanese government in 2015 and then appointed as the first “Digital Affairs Minister” in 2016 with a “non-hierarchical” staff of fifteen to help implement Taiwan’s new eight-year “Digital Nation Plan.”
Much as the government’s integration of information technology into its functioning proved decisive in Taiwan’s COVID response, the Taiwanese government has similarly thoroughly integrated information technologies into the day-to-day business of government for officials and citizens alike. This “digital government” or “e-government” strategy may seem somewhat novel or foreign in America, where jokes and complaints about trips to brick-and-mortar DMV offices are as salient as ever, but in Taiwan an ordinary citizen can largely and productively interact with government bureaucracies with not just a web browser, but on a single website. Moreover, this isn’t even just because the Taiwanese government has successfully digitized most of its functions, but because it deliberately wanted to design a system where citizens would enjoy online ease of access to any conceivable government service.
Taiwanese citizens who log on to this central web portal, using the very simple and appropriate URL www.gov.tw, are able to quickly find links to government services from birth certificates to registering deaths and every other service that might be useful at any stage of life in between, organized, quite literally, according to a graphic of a presumably Taiwanese stick-man’s life from birth, to education, work, and then retirement and death. Searching the site directory yields information and forms covering everything from military service to registering candidacies for elections, from both the national government as well as city and county governments. The government operates a platform called MyData that allows citizens—after proper verification-to download any information the government has on them, such as home or vehicle ownership registration, insurance status, personal income data, and even their own national ID photograph. Another government-operated web service allows citizens to inquire about and discuss legislation and policy issues as they are being drafted and implemented, including a feature for citizens to send emails directly to the heads of government agencies.
This digitization extends to the back end of government services as well: Taiwanese government agencies began exchanging documents electronically all the way back in the year 2000 on a dedicated broadband internet network, as well as maintaining an official online system for government procurement, including a database of unsatisfactory contractors. The Taiwanese government’s computerization push dates from the 1980s, though it was in 1997 that the Research Development and Evaluation Commission (RDEC) established the government’s “backbone network” and began the push for digitizing government operations and services. In the early 2000s, this also included official efforts to bring internet access to rural areas. By 2019, the internet penetration rate in Taiwan stood at 93% of the population, with 98% of internet users using a mobile phone to connect to the web.
Taiwan’s large digital footprint—both governmental and civilian—and poor relationship with mainland China naturally create a serious cybersecurity problem for the country. Taiwan’s government faces 20 to 40 million cyber attacks every month, including about 100,000 each month that specifically target Taiwan’s National Security Bureau. Moreover, it is no surprise that about 80% of successful attacks are identified as coming from mainland China. The first “Taiwan-China Hacker War” occurred all the way back in 1999 as mainland Chinese retaliation to statements by the then-Taiwanese president, when Chinese hackers infiltrated Taiwanese computer networks more than 160 times. This incident prompted the creation of Taiwan’s National Information and Security Taskforce (NICST), which was the Taiwanese government’s primary organization for cyber defense until 2016, when the government established the Department of Cyber Security. Shortly afterwards, Taiwanese President Tsai Ing-wen created the Information, Communication, and Electronic Force Command (ICEF) as an independent military command tasked with confronting China’s “hacker armies.” This independent cyberwarfare command was the first of its kind in the world. According to President Tsai, “cybersecurity is national security.”
Much as mainland China tries to disrupt Taiwan’s digital footprint to its advantage, it also tries to leverage Taiwan’s democratic discourse. Since Taiwan began to liberalize in the late 1980s, Taiwan has enjoyed a flourishing media and journalism sector with a relatively free press, though arguably also dominated by tabloid sensationalism. Taiwan’s four largest newspapers are editorially divided by their sympathy or antipathy to unification with mainland China. The China Times and the United Daily News are broadly considered to be nationalistic and sympathetic to China. The Liberty Times—whose owners also publish Taiwan’s largest English-language paper, the Taipei Times— and Apple Daily are broadly considered pro-Taiwanese independence and anti-China. These divides are more than merely editorial however: the Hong Kong-resident founder of Apple Daily was arrested by the Chinese government in 2020 for violating the territory’s new “National Security Law,” and sentenced to 14 months in jail in 2021. Conversely, the China Times’ tycoon owner lives in Shanghai, has massive business interests in mainland China, and ideologically supports unification. Over the years, China has deliberately used its economic and demographic heft, as well as domestic censorship, to shift Taiwanese media discourse into a pro-China direction.
Building Taiwan’s Silicon Valley
Intuitively, it makes sense that a global leader in digital government like Taiwan is also a global leader in technology. But why exactly is that the case? Simply put, because the Taiwanese government has not only long spearheaded and integrated innovations in digital government, but is itself responsible for spearheading the development of Taiwan’s technology industry as part of its overall strategy for economic development and national sovereignty.
Take for example a current project, seeking approximately $1.34 billion U.S. dollars of foreign research and development investment in the country, while simultaneously spending approximately $350 million in subsidies to help attract the capital. Crucially, unlike many other countries spending vast sums in order to shift themselves into an information technology-driven service economy, Taiwan can in fact credibly follow through on converting that capital into valuable R&D. The best justification for this is not statistical—the number of doctorates within the country cannot tell us if those doctorates are in fact evidence of skill, or if the nation has the social technology to use those skills. Rather, we note that Taiwan is the site of standout technology conglomerates like the Taiwan Semiconductor Manufacturing Company, TSMC, which is a leading supplier of integrated circuits to the world, supplying such firms as Apple. The firm was founded by Morris Chang in the late 1980s, after Chang worked at various chip manufacturers in the United States and realized that he could create a firm back home in Taiwan that simply manufactured whatever the engineers back in the states dreamed up: a “fabricator-less foundry.” This strategy most recently led to TSMC, along with South Korea’s Samsung, successfully beating U.S.-based Intel to create 7-nanometer scale and 5-nanometer scale chips in 2018 and 2020 respectively, by partnering with outside designers, including America’s AMD. The centrality of TSMC to the world economy was vividly demonstrated in the 2021 chip shortage, caused in large measure by surging demand and a shortage of some raw materials.
While this could demonstrate Taiwan’s capability for manufacturing, not R&D, the country’s ability to control a sizable amount of the market by naturally scaling with the human resources and capital available shows R&D prowess too. Taiwan has a highly educated workforce, with 45% of the working age population possessing a bachelor’s degree, compared to 44% of U.S. workers and 17% of Chinese workers. As it developed, the nation also demonstrated itself culturally able to take advantage of educational systems abroad in order to boost the skills of their own workforce—Morris Chang himself was educated at MIT and Stanford before going on to found TSMC.
TSMC was also not the first semiconductor company in Taiwan. The first, the United Microelectronics Corporation, still exists and along with TSMC was spun out of the Industrial Technology Research Institute (ITRI), a Taiwanese government R&D institution founded in 1973. ITRI is headquartered within the Hsinchu Science Park, an industrial park set up by the Taiwanese state in coordination with Taiwan’s leading universities and which is often dubbed the “Silicon Valley” of Taiwan. Hsinchu Park was proposed by Shu Shien-Shu, the former president of Taiwan’s National Tsing Hua University and then-minister of science and technology for the country. Shu had traveled the world looking for effective strategies to improve Taiwan’s technology industry, and was directly inspired by California’s Silicon Valley.
The Taiwanese finance minister for the first thirty years of independence, Li Kwoh-Ting, in the late 1970s even consulted Frederick Terman, Dean of Engineering at Stanford, on the correct strategy for getting Taiwanese nationals who had gone overseas to return to build Taiwan’s technology sector. Terman was not only a bright technological mind in his own right, but the architect of both Stanford University’s own strategy of public-private partnership on research after World War II, and of Stanford Industrial Park—today renamed Stanford Research Park—that has provided a physical home to companies such as Hewlett-Packard, Varian, Xerox PARC, Steve Job’s NeXT, Tesla, and Facebook over the decades. The successful creation of a “Silicon Valley” by design evidences vision and operational capacity on the part of the Taiwanese government.
This is an instance of a recurring phenomenon in the imitation of the West by the late-to-industrialize East: whether it’s in technology, industry, or good governance, East Asian governments from Japan to South Korea to Taiwan seek to replicate some successful Western effect, and end up building an entire rationalized institutional system that is geared to produce and maintain that effect, often ending up with a far more streamlined system than the messy and contingent Western system which produced the success in question in the first place.
Following the creation of Hsinchu Park, firms and government institutions flocked to the zone, attracted by advantageous tax breaks and co-location. TSMC and UMC are now both headquartered within the park, as are various other firms, foreign and domestic, and the Taiwanese space agency. Chiao Tung University and National Tsing Hua University are headquartered next door. This was not an accident; Shu intentionally mimicked Silicon Valley’s proximity to Berkeley and Stanford. Overall, this strategy seems to have been a resounding success. Stanford officials now regularly visit.
The Geopolitical Angle
It’s hard to find a country as obviously constrained by geopolitical logic as Taiwan. The island has been viewed by communist-ruled mainland China as a rogue breakaway province ever since its founding in 1949, when Chiang Kai-Shek and his nationalist Kuomintang (KMT) party government fled to the island, which to this day is officially known as the Republic of China—implying that the ruling Chinese Communist Party are illegitimate usurpers. Cross-strait relations did enjoy a thaw in the late 1990s when mainland China opted for a strategy of economic integration with Taiwan, aimed at eventual unification, but recent years have seen a reversion to high mutual tensions, in part spurred by the aforementioned Sunflower Student Movement that rejected further economic integration with the mainland, and China’s correspondingly more aggressive posture since then. With a resurgent mainland having basically caught up with, and in some areas such as military technology surpassed, the earlier-to-develop Taiwan, the future of the island as a de facto independent state looks uncertain.
It is possible that Taiwan's highly warranted apprehension of an invasion by the mainland Chinese has provided the national cohesion and trust necessary to undertake long-term efforts in technological and industrial planning, and maintain trust and collaboration between the state and the people. As WWI-era intellectual Randolph Bourne put it, war is indeed the health of the state. Profits aside, this is reason enough to pursue industrial and technological autarky.
Simultaneously, one should not underestimate the extent to which this pressure from Beijing has directly translated into effective responses in Taiwan. This is true even in the realm of national defense itself. From a purely theoretical perspective, Taiwan is eminently defensible. Occupying the island would require the largest amphibious invasion in history, and it is only possible on a select number of narrow beachheads for a few months of the year. Through a combination of fortification, terrain, cyber and missile attacks on the mainland, urban warfare, rabid near-suicidal citizen participation, and the feasible possibility of an American blockade of the Straits of Malacca near Singapore, one can indeed imagine a credible Taiwanese signal to Beijing that they are really not worth the price of invasion.
However, we do not see such a signal when we examine the current reality in Taiwan. China analyst Tanner Greer has convincingly asserted a more pessimistic view of Taiwan’s geopolitical posture today, developed over nine months of interviews with Taiwanese security researchers, recently discharged conscripts, officials in the governing DPP party, arms engineers, and active-duty ROC army and navy officers. According to Greer, the Taiwanese simply do not have the will to turn their island into an “impenetrable fortress.” Challenges in the recent two decades or so include paralysis within the military and national service establishment, partisan gridlock, poor military strategy, poor military training and procurement, brain drain from the military, and a spirit of defeatism among the political class. These security concerns are of course only the most obvious weaknesses that the mainland could exploit; economic pressure and even a naval blockade appear far more likely than an invasion. This is all the more reason for Taiwan to pursue innovation and capacity-building in areas of technology and industry not directly related to military affairs—but without the military capacity to back these spheres up, they remain ultimately vulnerable.
Technology does not come from a vacuum, and it is not enough for a government to merely spend money on spurring innovation, or to establish R&D institutes and special economic zones. Rather, a thriving innovation ecosystem requires an industrial base. New technologies must be iterated upon and manufactured, and technologists must be able to draw upon a deep pool of technical personnel and know-how. Only with this base can the virtuous cycle of innovation take off—even seemingly immaterial innovation, such as in the realm of software, both ultimately comes from material breakthroughs in silicon technology and must be undertaken in tandem with evolving systems of hardware. And since the state has a crucial role in terraforming systems of political economy such that industry and technology can flourish, for example by implementing effective industrial policy, all of this is intimately bound up in problems of public policy.
The origins of the Taiwanese industrial system are not hard to discern, since they closely follow state policy throughout the latter half of the 20th century. In the 1950s, the government of the island, newly severed from the spheres of control of both the imperial Japanese and the Chinese mainland itself, pursued a policy of import substitution—by which imports of manufactured goods are blocked in order to increase demand for domestically produced goods—as a means of economic recovery after World War II. By the 1960s, in order to spur growth and accelerate the process of industrialization, Taiwanese policymakers shifted to a policy of export orientation, by which the state spurs fierce competition among industrial firms by picking and supporting ones which can manufacture the most goods for export, with an eye towards weaning those infant industries that they support by compelling them to eventually become self-sufficient, a concept known as export discipline. Throughout the 1960s and 1970s, this strategy worked, and Taiwan’s industrial sector grew.
This system encountered some barriers as the 1970s wore on, especially as the oil crisis of that decade began to eat into profits. Taiwan’s strategy of industrialization, which hitherto had focused on labor-intensive industries in order to employ the maximum number of people, no longer made economic sense, and the island’s elites found that it would not be sufficient to catch up with the West. In the late 1970s and early 1980s, the Taiwanese government changed tack again, shifting their policy to favor capital- and technology-intensive industries as an avenue of development. In order to reignite growth and deepen their industrial system, Taiwanese policymakers used the postwar industrial base that they had built as a foundation atop which to create the highly functional technical system that we know today. It was in 1980, for example, that Hsinchu Science Park was founded. Into the 1980s, the government began targeting particular strategic industries as foci of capacity-building and innovation—one of the earliest ones being semiconductors—and this process of strategic economic planning continues to this day.
Although the growing threat from Beijing looms over Taiwan’s successes, it would be a mistake to let recent tensions and uncertainty cloud our judgment about the remarkable feats of Taiwan’s government. Taiwan has been ensuring its sovereignty by combining technological innovations with institutional flexibility for decades, as most recently indicated by the democratized and resoundingly successful response to the COVID-19 pandemic. Whatever Taiwan’s future holds, it is obvious that the island has already provided us with a valuable case study into the power of institutions to shape public policy, industry, and technology.
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