Taiwan probably has the biggest little economy in the world. The province ranks only 37th in size among the islands of the world.
Two-thirds of Taiwan's 14,000 square miles is mountainous.
Population is large for the area. Taiwan has in fact the highest population density in the world.
But except for a few states of Western Europe, no country has established such a big economy on such a small geographic and population base.
With a population of about 17 million, the Republic of China is competing with South Korea, which has three times the land area and twice as many people, and even with Japan and its more than 100 million people.
For this year, the gross national product will be close to US$20,000 million and per capita income around US$900. These figures indicate that the Taiwan economy of the Republic of China is fast approaching developed status.
Up to a quarter of a century ago, Taiwan had a thriving agriculture and scarcely any industry.
In 1952, agriculture supplied 35.7 per cent of the net domestic product and industry less than 18 per cent. These figures have been turned around in only 25 years. By 1981, agriculture is expected to be down to about 10 per cent and industry up to nearly 40 per cent.
Industrial growth got under way in the 1950s with small factories making substitutes for imports. Textiles became the first sizable industry and still leads in export volume despite the upward surge of electrical machinery apparatus.
Today's trend is toward heavier and more sophisticated industry: iron and steel, shipbuilding, petrochemicals and advanced electronic products.
Even so, Taiwan's economic miracle is still largely attributable to light industrial diversification that provides a wide variety of export goods.
Textiles (nearly US$2,500 million in 1976) and electrical machinery (US$1,270 million in 1976) are Taiwan's leading exports. But umbrellas brought in US$60 million, machine tools US$32 million and bicycle chains US$2 million last year.
Taiwan's cheap shoes took over such a big share of the U.S. market that Americans sought and obtained voluntary restriction of sales earlier this year. Taiwan is the world's biggest exporter of such products as shoes, umbrellas and Christmas lights.
Much of the island's industry originally was based on cheap labor. Wages have increased gradually and will increase further in the years ahead, but Taiwan is still competitive.
Reliance is now placed on increase of productivity, improved management and advanced technology.
Foreign investment has helped raise the technical level. Foreigners and overseas Chinese have brought US$1,600 million worth of capital to Taiwan. The 1976 volume was US$141 million.
Revision of the foreign investment law has extended the tax holiday to as long as eight years for industries which are capital-intensive or technology-intensive and therefore take longer to become profitable. Other incentives have been made more attractive.
Foreign investors and their resident managers say that special economic privilege is only one reason for establishing factories in Taiwan.
They like the friendly attitude of the government and the work ethos of the people. Labor is intelligent and loyal. Unions and management cooperate for the common good of labor and capital. The government serves as mediator in the event of misunderstandings.
Business and industrial red tape exists, as it does everywhere, but has been steadily reduced.
Twelve foreign banks have branches in Taipei to make their own industrialists and traders feel at home. All are making local loans as well as supporting foreign trade.
Three export processing zones have been established to make things easier for investors whose plants import components and raw materials for the assembly of a product. These zones combine the advantages of a free port with those of an industrial estate. Red tape is reduced to a minimum.
For bigger factories, many industrial estates have been opened. Imported materials are admitted duty free or the duty is refunded when the finished product is exported.
Electric power generation is keeping up with demand. The cost is lower than in such other Asian industrialized countries as Japan and South Korea. Two nuclear plants are under construction and a third is planned.
Domestic steel, aluminum and petrochemical plants are turning out intermediates for use by both locally owned and foreign-invested industry. Two color television tube plants will begin production in 1978 to move the TV receiver industry another step toward self-sufficiency.
Trade and industry have helped Taiwan maintain close relations with more than 125 countries, many of which do not have diplomatic relations with the Republic of China.
Of the four top-ranking trade partners, only the United States has diplomatic ties with the ROC. Trade offices of one kind and another provide close and amicable connections with Japan, Hongkong and Germany.
Taiwan industry also serves the small but growing market of the island province.
Most of the motorcycles and nearly all of some 30,000 small sedans sold in Taiwan annually are made domestically. The variety of locally made household appliances ranges from rice cookers to air-conditioners. Taiwan-made electric fans are popular at home and abroad. The biggest appliance maker - Tatung - has a fan factory in the United States and plans to make TV sets there.
Today's factories are increasingly well lighted and ventilated. Workers are assured of days off, holidays and overtime. A new labor law has reduced the number of hours which women may work. The Legislative Yuan is studying an increase in the minimum wage to reflect the rising standard of living.
Building construction has been the fastest growing domestic industry for several years. The thriving economy has produced an insatiable demand for factories, office buildings and apartment houses. In cities, the trend is toward high-rise construction to economize on the use of land.
Satellite industries have grown up to supply building contractors. Most hardware was once imported. Now Taiwan is a major exporter. Plywood is an important product. Ceramic tile and sanitary wares are homemade. So is most of the furniture which goes into these new buildings.
The countryside is not being ignored. Many factories are being opened in rural areas to take advantage of the labor supply.
Farms themselves produce raw materials for processing and export: sugar, mushrooms, asparagus, other vegetables and fruit.
Some entrepreneurs and some economists believe that Taiwan has the potential to catch up with Japan in industrialization.
Production and value will be less than that of the Japanese. Taiwan does not have the space or the population.
Free China does have the resource of a people who have not quite arrived economically and who are determined to move up fast.
Workers and entrepreneurs are willing to work hard for their good life and the prosperity of the Republic of China. The fact that they are doing so explains the magnitude of the Taiwan success story.
As Taiwan entered the 1970s, it had an economy that was growing by more than 10 per cent annually and an infrastructure that hadn't been enlarged fast enough to keep up.
Also trailing demand were electric power generation and such basic industries as steel, shipbuilding and petrochemicals.
Harbors were so clogged with shipping that unloading delays often ran into weeks. Some of the freight conferences were threatening to boycott Taiwan's ports.
Railroads couldn't carry products from factory to ship fast enough. Highways were jammed.
If economic growth hadn't slowed with the recession of 1973-74, transportation facilities might have reached a point of near paralysis.
When Chiang Ching-kuo stepped up from deputy premier to premier in mid- 1972, he resolved that remedial steps had to be effected at once.
Shortage of land in larger cities has made apartment dwelling the new way of life for many people. (File photo)
This led to undertaking of the Ten Major Construction Projects, a US$7,000 million program to transform the Republic of China into a developed country by the 1980s.
Most of the projects will be essentially completed by the end of 1979, although some - such as energy development - are ongoing. Others will be further enlarged after completion of a first stage.
Power development is the most costly of the Ten Projects. More than US$3,000 million will be spent to increase the installed capacity of generation to more than 11 million kilowatts by 1983. There will be three nuclear plants - two in the north and one in the south - producing more than 5.2 million kilowatts. The first of the nuclear generators is scheduled to go on line before the end of 1977.
Enriched uranium fuel for the reactors has been obtained from the United States. Its use and the disposal of wastes are subject to continuous inspection. The government is a signatory of the nuclear non-proliferation treaty and is pledged to use atomic energy only for peaceful purposes.
The Taiwan Power Company is also adding to thermal and hydroelectric output. Natural gas is being harnessed' for use as both a fuel and as a raw material. Experiments are under way to make use of the island's sizable resources of geothermal energy.
Industry consumes about 75 per cent of the electricity generated on Taiwan. TPC must produce the energy to keep industry growing.
The second most costly Big Ten Project is the North-South Freeway linking Keelung, the northern port, with Fengshan, a city to the south of the second largest city and biggest port of Kaohsiung in the southwest. The expressway runs through such other cities as Taipei, Taichung and Tainan.
Parts of this toll road, which will pay for itself in about 20 years, are already open. Investment return is figured at more than 20 per cent annually from savings in moving vast numbers of passengers and huge quantities of freight.
Fleets of deluxe highway buses will make the Taipei-Kaohsiung run in about four and a half hours. The industrial growth of west central Taiwan will be promoted. The superhighway will also contribute to Taiwan's defense.
Paralleling the North-South Freeway is the west coast mainline railroad. Another of the Ten Projects is electrifying this line to provide faster, more economical transportation and reduce pollution.
The electrified railway will carry about a third more traffic in a third less time. Energy consumption will be cut by about one-half.
Jumbo drills push the Suao-Hualien railroad through rugged mountains at the rate of 6 meters daily. (File photo)
Another rail project will link Suao and Hualien on the east coast by a mountain line that Japanese engineers once said couldn't be built. The Chinese are doing it - tunneling through some of the most rugged mountains in Asia and bridging fast-running streams.
Forty tunnels and 35 major bridges make up nearly half of the total route of about 55 miles. The terrain is so tough that two American-made Big John excavators couldn't do the tunneling. Men, dynamite and simpler machines have been called upon to push the railroad through Taiwan's "rocky mountains."
Suao is the northeastern terminus of the island's west coast mainline railroad. The existing east coast line from Hualien to Taitung near Taiwan's southeastern tip is being widened.
By 1979 or 1980, trains will be making the run from Kaohsiung on the west coast to Taitung on the east coast. Although the two cities are less than 100 miles apart as the crow flies, the around-the-top-of-the-island route will cover nearly 500 miles.
Construction of a direct line through the southern mountains to connect Kaohsiung and Taitung will be undertaken in the 1980s. With the completion of this link, Taiwan will have an around-the-island system.
Two ports are among the Ten Projects. That at Suao will relieve overcrowding at Keelung. The other is at Taichung on the west central coast, an important new industrial area.
The first phase of work at Taichung has been completed. The capacity of 3 million tons of cargo annually will be raised to 12 million tons by 1982. Capacity of Kaohsiung, Keelung and Hualien ports is being increased. Already one of the world's biggest and best ports, Kaohsiung eventually will have annual capacity of 100 million tons.
Taipei's convenient Sungshan airport is situated beside a river in the heart of the city. Sungshan is already operating at close to capacity but passenger and freight volume continue to increase. The 1976 figures were 6 million passengers and 120,000 metric tons of freight.
Construction of the Taoyuan airport to serve Taipei will be completed in 1979. Although the site is 19 miles east of the city, the North-South Freeway will cut driving time to half an hour. With three landing strips, Taoyuan will be able to handle 64 aircraft at one time. Expansion will take care of northern Taiwan's civil aviation needs well into the 21st century.
Three industrial projects round out the Ten Projects.
The Kaohsiung shipyard has been completed and is already building 450,000-ton supertankers and other vessels. It launched the world's third largest ship last June.
This project was started before the oil embargo brought a temporary halt to most supertanker construction. Even so, the shipyard is turning out to be economically viable.
The China Shipbuilding Corporation has obtained contracts for foreign flag vessels and will help modernize the Chinese merchant marine. CSBC was reorganized as a state corporation this year.
Nearing completion at Kaohsiung is the integrated mill of the China Steel Corporation. Production of 1.5 million metric tons of steel products will begin in 1978. Capacity can be increased to 2.7 million tons in a second stage and to 6 million tons in a third.
Most of Taiwan's steel and iron output has been devoted to materials needed in building construction. CSC's more sophisticated products will serve the needs of shipbuilders, auto makers and other big industrial users of steel. Imports can be reduced.
Growing up at Kaohsiung is a petrochemical industry to provide intermediates for the synthetic textile and plastics industries. Raw material is provided by the refinery of the Chinese Petroleum Corporation. Among new petrochemical products are ethylene, acrylonitrile, ethylene dichloride, acetylene, propylene and styrene. An artificial rubber plant began production in 1977.
The Ten Projects will be largely completed by 1979 and the Republic of China is looking forward to the new challenges of the 1980s.
In addition to continued basic expansion of infrastructure and sophisticated industry, the government will develop resources of the neglected east coast and also see what can be done to exploit the terrain and possible riches of the rugged mountains that make up two-thirds of Taiwan.
About a third of Taiwan's people still live on farms. The number is steadily declining.
Mechanization is relieving the rural labor shortage resulting from Taiwan's farm-to-city migration. (File photo)
Thousands of farm workers leave the countryside every year for industrial jobs and city life. They are motivated not so much by the dislike of fanning as by the limited supply of land.
Farms are already small. The average size is under 1 hectare (a little less than 2.5 acres). Further fragmentation would make farming uneconomical.
The farm-to-city movement has left agriculture with a shortage of labor which must be remedied by mechanization if growth is to be maintained at a high level.
Twenty years ago, Taiwan had some of the most productive labor-intensive farms in the world.
The know-how of the free Chinese farmer was passed on to other continents - Africa especially - by farm demonstration teams.
These missionaries of farm plenty were more welcome than British, French and American predecessors. They worked with muscles rather than expensive machines.
Africans couldn't afford tractors but had plenty of labor. The Chinese farmers taught them how to combine manpower with agronomy to obtain dramatic crop yields.
On Taiwan, the supply of farmhands began to run short in the late 1960s. From 1969 to 1975, the farm labor force declined from 1.72 million to 1.65 million.
Meanwhile, the farmer was being called upon to grow more of everything. He quickly found there was no alternative to mechanization.
Government came to the farmer's assistance with a variety of programs, many of them carried out through the Sino-American Joint Commission on Rural Reconstruction.
Long-term loans at low interest were provided for the purchase of power tillers, tractors, planters, harvest combines, dryers and other machines.
Model farms were established to teach mechanization and other new skills.
Consolidation of plots was encouraged to make 'the use of machinery more practical and efficient.
Cooperative ventures were undertaken as an antidote to the limited size of individual farms.
At the start of the 1960s, Taiwan was almost totally dependent on draft cattle for plowing and other heavy farm work. The yellow ox was once more familiar than the truck even in the transporting of heavy city burdens.
Today the count of power tillers is approaching 60,000 and that of tractors is nearing 3,000.
These machines are sufficient to till about three-quarters of Taiwan farmland. By 1981, machine cultivation will be available for 85 per cent of tilled land.
The small power tillers are well adapted to Taiwan conditions. They are much cheaper than tractors but more useful on a small farm. Motors can be used for other work and even, in the case of the bigger ones, for farm-to-market transportation.
The tractor count will rise to 4,000 by 1981 as more farms are combined for cooperative operation.
Planters now can handle about 15 per cent of Taiwan's tilled area. Combines are available to harvest slightly less than that. Dryers can handle 6 per cent of the rice crop.
'These figures will rise rapidly in the years just ahead. The number of planters will reach 30,000 by 1981, a sixfold increase over 1976. Combines and dryers will be quadrupled.
The government, JCRR and Farmers' Associations are sponsoring hundreds of centers and teams to promote mechanization and teach the use and maintenance of machines.
In another five years, machines will be available to do the work of some 20 million farmers. That promises increased production as well as a solution of the farm labor problem.
Although only about a quarter of Taiwan's land is arable, rice production has reached 2.7 million tons - more than sufficient for domestic consumption. Overall food self-sufficiency is 85 per cent. Imports of wheat, soybeans, maize and other grains are offset by exports of bananas, citrus, fishery products and such processed farm products as sugar, mushrooms, asparagus and other vegetables and fruits.
Agricultural growth registered 10.7 per cent in 1976, paced by fisheries (7.7 per cent) and livestock (29.2 per cent).
Crops were up 7.1 per cent in 1976 with these as leaders:
Metric Tons
Sugar cane 810,000
Sweet potatoes 1,820,000
Bananas 185,000
Pineapples 282,000
Oranges 397,000
Other fruit 430,000
Mushrooms 50,000
Onions 32,000
Asparagus 87,000
Other vegetables 2,170,000
Peanuts 26,000
Maize 110,000
Tea 25,000
Livestock output included 5.3 million hogs, 63 million chickens and 18 million ducks.
In the Japanese occupation period from 1895 to 1945, farmers concentrated on rice, sugar, pineapple and bananas.
Diversification has brought new prosperity to agriculture. Asparagus, which wasn't even grown until the 1960s, earned US$110 million from exports last year. Another relatively new crop, mushrooms, produced US$85 million in foreign exchange.
Taiwan is the world's biggest exporter of asparagus and mushrooms.
A land reform program undertaken in the late 1940s started Taiwan agriculture on the road to its present successes. Farm tenancy has been virtually eliminated. The land-owning yeoman has the incentive to work harder and plow his earnings back into the land.
Although the government performs many services for the farmer and is helping him to catch up with the city worker's standard of living, the business of growing food basically remains a private enterprise.
Farms are privately owned. Cooperatives are voluntary. There are no peasants. Absentee ownership has been virtually eliminated.
Farmers see some of their leading government officials more often than city dwellers.
One of the favorite week-end excursions of Premier Chiang Ching-kuo is to the countryside. He takes other top-ranking functionaries with him and listens to the folk wisdom of the nation.
Easier farm loans and a greatly improved program of fertilizer distribution are results of these first-hand inspections of rural conditions.