Market Incentives Even if entrepreneurial dynamism
is hard to measure precisely, it is in evidence
throughout the island. Incentives to produce
wealth rather than merely to seek a share of existing
wealth (rent-seeking behavior) are established with
solid property rights and not significantly undermined
by other policies.
Taiwan’s government has not always been a
highly efficient engine of progress. The mere fact
that the Republic of China administers both a central
and a provincial government covering exactly
the same territory presented many opportunities
for inefficiency. This is a legacy of the Chinese civil
war, which the ROC lost. Moreover, until 1991, the
government ruled Taiwan under martial law, creating
opportunities for corruption. Indeed, in the
1990s, new corruption scandals were reported almost
daily in Taiwan’s many independent newspapers.
The free election of Lee Teng-hui as president
in 1996 was the culmination of a smooth five-year
transition to democratic governance. Elections have
been highly competitive since then and are generally
viewed as free and fair; power has changed
hands peacefully.