Taiwan's light and heavy industries
The first policy was the “Rice-Fertilizer Barter Program”. This policy was “exchanging rice for fertilizer”. Farmers could not buy any fertilizer themselves; instead, the government controlled 100% of the fertilizer; The only source of fertilizer was the government. The exchange rate was 1.5 kg fertilizer: 1 kg rice.
By implementing this policy, the government achieved some positive results. According to Taiwan Encyclopedia, the following points are the results. 1. The government reduced the income of farmers, and since the income in this industry was relatively high, farmers in rural areas, women at home came to factories. It increased the labor supply. 2. By doing this, the government controlled the rice in the market, so they were able to control the price of rice and lower it. The price of rice was more stable. 3. The government bought rice at a lower price, and then they used this money to pay government workers, teachers, and soldiers.
The ROC government set up many protective measures for Taiwan's "immature industries" so that Taiwan could develop products with low technology requirements, low investment, high labor, and national needs. 1. Restrict imports of food, soap, clothing, and other items. 2. Raise import tariffs. 3. Lower export tariffs. The purpose of all these policies was to encourage "light industries" to produce for Taiwan's needs. According to the Taiwan Encyclopedia, by 1954, there were no textile imports, and by 1957, the cement industry's production was high enough to stop importing any cement.
After "import substitution", there are many reasons to carry out the next development. According to the Encyclopedia of Taiwan, because agricultural production technology has made great progress, there are more than one million people in the farms who need to work. In addition, since 1958, because the demand within Taiwan is too small and the output of factories exceeds the demand, they need to sell their products overseas. On the other hand, the government also encourages other countries to invest in Taiwan. In September 1960, the government announced the "Investment Encouragement Ordinance", reduced export tariffs, and established export processing zones. This unique area attracted investors to come and build factories, and then export products all over the world, so this development is called "export-oriented". 679/5000 Export processing zones are an important development at present. The Taiwanese government set up a special zone at the seaport and encouraged investors to build factories, thereby reducing export tariffs, lowering rents, etc. The Kaohsiung Export Processing Zone is the first zone in the world. The products produced in the zone do not need to pay taxes before exporting. The great success of Taiwan's Export Processing Zone has brought many employment opportunities. Kaohsiung has become the second largest city in Taiwan today. The Port of Kaohsiung is also the largest port in Taiwan.