What Has Been Globalized? Internationalization in Taiwan





Published date: 

December, 2014


Alex Chienwu Hsueh
Chienwen Lin


In this article we apply Rodrik’s (2011) theoretical framework of “The Political Trilemma of the World Economy” to investigate whether Garrett’s (1998) finding about the OECD countries’ experience of globalization can still hold in Taiwan. We find that Taiwan’s globalization process is different from that in the OECD countries. After the collapse of the Bretton Woods System, in “The Trilemma” framework, the OECD countries walk along the path of “global governance,” successfully mitigating the negative impact of globalization on society by international integration and international policy coordination. Different from the OECD countries’ experience, China precludes Taiwan from joining global governance; Taiwan’s main social cleavage precludes politicians from paying attention to domestic compensation issues; and Taiwan’s small scale domestic market precludes the government from limiting the degree of globalization. Therefore, Taiwan gradually walks along the path of “golden straightjacket.” Walking along this path, Taiwan maintains its economic growth and competitive ability mainly by reducing the cost of production and transaction in ways such as cutting down the domestic compensation and social welfare. As a result, the government sacrifices the losers of globalization and pays the price of neglecting the negative impacts of globalization on society. This study also demonstrates that it is a structural predicament that precludes Taiwan from choosing the path of “global governance.” Therefore, as long as the status quo remains so, it is very difficult for Taiwan to unilaterally switch the path from “golden straightjacket” to “global governance” simply by domestic political reform or policy change.