The aim of this article is to showcase how Taiwan entered into the us-led capitalist system via the aid (1951-1965) as an intermediate and how was the aid related to Taiwan’s post-war economic development. There are three points made in this article. First, the main purpose of the us aid was to reinforce Taiwan’s military capabilities against the Communist China’s invasion. Second, although the us aid was not for Taiwan’s economic development, it was by means of the us aid that the small island could afford the large military establishment without damaging its domestic economy. Third, with the us assistance, the kmt had its bureaucratic agencies to guide all aspects of the island’s economy. In consideration of large military expenditure and the economic chaos at that time, there would be no so-called “state-led development” in Taiwan without initial financial injection from the us.
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