The Future of Financial Activism in Taiwan? The Utility of a Mindset-centred Analysis of Developmental States and Their Evolution

Since the end of WWII, the so-called developmental states of East Asia have become famous for their ‘financial activism’: their efforts to link the financial and productive sectors of their economies in ways that advance national development objectives. However it is now widely acknowledged that the twin pressures of global financial integration and financialisation have transformed the policymaking landscape and complicated the pursuit of financial activism. So what do these developments mean for the capacities of East Asian states to pursue developmental ambitions? To address this question, I adopt a novel, mindset-centred analytical framework for the study of developmental state evolution and apply it for the first time to the case of Taiwan. My analysis reveals that the evolutionary trajectory of Taiwan’s developmental state has not been linear; since the early 2000s, the state’s commitment to and capacities for financial activism have waxed and waned. Moreover, two factors emerge as particularly significant in this waxing and waning: social legitimacy and political leadership. This paper demonstrates the analytical utility of a mindset-centred analysis when it comes to investigating the dynamics of developmental state evolution, and why some national variants appear more durable than others at different moments in history.