Background Note | HBS Case Collection | March 2009 (Revised September 2010)

A Strait of Uncertainty: Taiwan's Development in the Shadow of China

by William C. Kirby, J. Megan Greene and Tracy Manty

Abstract

The "Taiwan Question" has been at the heart of politics in East Asia since 1950, when the Americans intervened in the Chinese civil war; or perhaps even since 1895, when Taiwan became part of the Japanese empire. It is a contested place that has played an important role in the story of modern China and modern Asia. Today, relations between the People's Republic of China (PRC) on the Chinese mainland, and the Republic of China (ROC) on Taiwan, are improving rapidly. Taiwan investment in the mainland has played a major role in China's economic boom in recent decades. Investments, partnerships, study, travel, and marriage across the Strait point to a future of ever-greater interaction between two parties that brought Asia to the brink of war three times in the last half-century (1954, 1958, 1996). But what does the future hold? Will Taiwan thrive and yet maintain its autonomy as part of the broader economy of "Greater China"? Will economic integration lead, inexorably, to Taiwan's incorporation into the People's Republic of China? How might the global economic crisis affect any of this? To gain perspective on modern Taiwan, let us look first to its history.

Keywords: History; Development Economics; Investment; Economic Growth; Cross-Cultural and Cross-Border Issues; Financial Crisis; China; Taiwan;

Citation:

Kirby, William C., J. Megan Greene, and Tracy Manty. "A Strait of Uncertainty: Taiwan's Development in the Shadow of China." Harvard Business School Background Note 909-408, March 2009. (Revised September 2010.)