State Transformation and the Evolution of Economic Nationalism in the East Asian Developmental State: the Taiwanese Semiconductor Industry As Case Study
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State transformation and the evolution of economic nationalism in the East Asian developmental state: the Taiwanese semiconductor industry as case study Jinn-yuh Hsu This paper empirically highlights the role of nationalism in the development of the semiconductor industry in Taiwan. First, it demonstrates how the pre-1980s Taiwanese developmental state mobilised Chinese economic nationalism against Japanese colonialism and Chinese communism and adopted the strategies of graduated sovereignty, selectively subsidising certain areas and sectors, and promoting national (homogeneously imagined) territorialisation to integrate with the international market. Second, the paper exhibits how in the late 1980s, when the outflow of capital to Mainland China became a compelling phenomenon and Taiwan democratised, popular sovereignty became the norm and Taiwanese nationalism emerged. In response, the democratised state started employing Taiwanese economic nationalism and implementing populist territorial policies to consolidate the support of ‘us’ (the Taiwanese/Taiwan) versus ‘them’ (the Chinese/China). This made China and everything related a security concern that had to be excluded as ‘the other’. This paper responds to the appeals of political geographers to give nationalism a central place in contemporary theories of the nation-state and contributes to the theory of the developmental state by bringing ‘the nation’ back. While most of the existing developmental state literature focuses on how the roles and effects of ‘the state’ influence economic development, taking ‘the nation’ seriously can provide more accurate explanations for how and why the state focuses on development or not. Accordingly, through valuing the nation this paper promotes a theory of the developmental nation-state. Key words China; economic nationalism; economy–security nexus; developmental nation-state; Taiwan National Taiwan University, Taipei 106, Taiwan Email: [email protected] Revised manuscript received 11 October 2016 and economic restructuring. Moreover, it answers the Introduction question whether or not the democratic developmental In the mid-1970s, East Asian Developmental States state was a solution to the nationalism-haunted econ- (EADS) like Korea and Taiwan embarked on a omy, particularly under the concern of national security developmental programme to reduce their reliance on after the 1990s, when political democratisation and labour-intensive, low-skill industries and upgrade their economic interdependencies accelerated the transfor- economies to the relatively capital- and technology- mation of the developmental state. intensive material or component industries, such as The main argument here is that mainstream expla- steel, petrochemicals and semiconductors. Given its nations of the success of industrial upgrading in EADS lack of endogenous technology, how to select, evaluate focus on the role of ‘the state’, in terms of both the and execute technology transfers was a difficult issue autonomy and the capabilities of the state, while little for an industrialising economy like Taiwan. In search of attention is paid to ‘the nation’, which is usually industrial independence and an enhanced national conflated with the state within the framework of the competitive advantage, the state mobilised certain nation-state (Agnew 2003). However, understanding kinds of economic nationalisms to foster the popular the catch-up race for national pride witnessed in EADS will to develop strategic industries (Amsden 1999; depends on a theory of nationalism in which the Woo-Cumings 1999 2005). This paper seeks to uncover imagined community of the people needs to be the ideas and institutions that undergirded economic seriously taken into account by political geographers development in the late-industrialising Taiwanese state, (Kuus and Agnew 2007). Moreover, as increasing cross- which in the 1970s was engaged in political transition border flows of capital and people give rise to The information, practices and views in this article are those of the author(s) and do not necessarily reflect the opinion of the Royal Geographical Society (with IBG). ISSN 0020-2754 Citation: 2017 42 166–178 doi: 10.1111/tran.12165 © 2017 Royal Geographical Society (with the Institute of British Geographers) State transformation and the evolution of economic nationalism 167 contending nationalisms with divergent homelands, depression and war. Political leaders are urged to how these states reposition themselves to represent discard mercantilist policies. However, such a narrow the well-being and security of their populaces and definition of economic nationalism in terms of protec- imagined territories becomes a key question. This tionism is contested by a number of development paper examines the case of the development of the scholars, such as Crane (1998), D’Costa (2012), Glass- semiconductor industry in Taiwan, which is key to man (2004), Harmes (2012), Helleiner and Pickel the economy–security nexus of the island, to illustrate (2005), Nakano (2004), Pickel (2003) and Shulman the interplay between nation-building and state-build- (2000). These scholars argue that economic national- ing in the process of industrial development. The paper ism should not be interpreted as any particular addresses the intermingled theoretical issues of the substantive doctrine, but instead be understood variegated effects of sovereignty, nationalist imagined fundamentally as a generic discursive structure (Hel- territories and the cross-border economy, as raised by leiner and Pickel 2005). Economic nationalism can be political geographers and scholars of geopolitics such as considered as a set of practices designed to create, Sparke (2005) and Agnew (2009). bolster and protect national economies in the context The second section of this paper examines theories of of a world economy. Although economic nationalism is the developmental state. However, in contrast to the not necessarily antithetical to external economic activ- emphasis most statists place on the rationality of the ity, it is opposed to allowing a nation’s fortunes to be bureaucracy, the discussion focuses on the ideas determined by world markets alone (Nakano 2004). and practices that constitute and discipline the Economic nationalism implies that a state’s eco- national populace’s worldviews and their devotion to nomic development is embedded in nationalism or a specific developmental projects. I argue that economic state’s national identity. Due to the key role played by nationalism drives the development of the political will, the nation-state in most public discussions, distinguish- which causes the success or failure of such projects. As ing between the nation and the state is constructive for such, by showing how the interplay between contending understanding the dynamics of economic nationalism in nationalisms and the political will of the populace a state’s development. While the concept of the state produces state policies, the section relates national refers to the concrete political apparatus that governs identities to the geographical scales and contexts in people, territory and resources, the concept of the which they are embedded. The third section examines nation is more abstract and refers to a collective nationalism in the context of the development of the identity or an imagined community (Anderson 1983) semiconductor industry in Taiwan and against the that draws people together to undertake political background of Cold War politics and the development action. of (Chinese) nationalism in the 1970s. The fourth The state can derive its political power from the section illustrates how Taiwanese political leaders after nation in two ways. First, developmental statists such as the democratisation process in the 1990s fostered a kind Amsden (1989) and Woo-Cumings (1999) argue that of Taiwanese nationalism, which subsumed the hege- the state can guide and protect the economy in order to monic Chinese nationalism of the 1970s, in order to deal safeguard the nation from external imperialist and with the rise of China. This new kind of nationalism had communist threats. Second, the cohesive power of the consequences for the economy–security nexus of the nation could foster an imagined community shared by Taiwanese semiconductor industry in the context of the members of the state, which then enhances social cross-strait economic exchanges. The final section integration crucial for developing a successful state summarises the empirical findings and concludes by economy (Herrera 2010). re-examining the theoretical implications of the con- Arguing that state policy is embedded in national juncture and disjuncture of nation, state and territory. identities does not pretend that nationalism is a pre- existing entity ‘out there’. In contrast, the argument perceives nationalism as representing a complex web – Economic nationalism and the economy of disputed and contingent relations between the self security nexus under the transformation of and other (people) and the onshore and offshore the nation-state (territoriality). All are indeterminate and usually Two diagnostics, nationalism and security, offer the most defined by the state through political practice and powerful explanations of success (and failure); they illustrate law stipulation (Kuus and Agnew 2007; Mezzadra and both the enormous difference between the northeastern and Neilson 2013). southeastern patterns of Asian development and the vast Similarly, the state, as the political