Globalisation, Democratisation and the Institutional Transformation of Taiwan's Welfare Regime

In the context of the discussion about the governance capacity of small states in the world market raised by Katzenstein, the case of East Asian newly industrialised countries is an interesting one. This article takes the development of social policy in Taiwan as a case study through which to explore the role of social policy in the process of rapid industrialisation in small states. It is argued that in the initial phase of industrialisation the productive component of social policy was highlighted by the developmental state to serve the goal of economic development. Social policy functioned at this stage as an effective instrument to dampen the cost of labour and thus contributed to the low-cost strategy of developmental state. Since the 1980s, however, social policy has been profoundly transformed as a consequence of economic globalisation on the one hand and domestic democratisation on the other. It is argued that social policy making since the 1990s in Taiwan has shifted in emphasis from the productive to the consumptive component. Finally, it is suggested that three factors will be decisive in determining Taiwan's social policy in the future: limited governmental revenues, fiscal strain due the public debt problem and the steering capacity of minority governments.