The Sino-American Joint Commission on Rural Reconstruction (JCRR) shifted its work to Taiwan in 1949, using U.S. support to coordinate programs in farming, irrigation, credit, and extension services. These programs complemented land reform by helping new owner-farmers raise yields and incomes. The institutional capacity built by JCRR became a key foundation for Taiwan’s later growth.
After losing control of mainland China in the Chinese Civil War, the Republic of China (ROC) government moved its central administration to Taiwan. The new government faced urgent problems: rural inequality, low farm productivity, and the need to stabilize society and finance recovery. These pressures set the stage for major land and economic reforms.
Beginning in 1951, the government sold public farmland to tenants on standardized terms. This expanded owner-cultivation and created a practical model for later redistribution of private large holdings. The sales also generated resources that helped finance subsequent stages of reform.
Rent reduction policies limited tenant rent to a maximum of 37.5% of the main crop yield, reducing the power of landlords and increasing tenant security. By lowering rent burdens, the policy raised farm households’ disposable income and helped reduce rural conflict. This was the first major step in a three-stage land reform sequence.
With the Land-to-the-Tiller reform, large private landholdings above legal limits were purchased by the state and resold to tenant farmers. Landlords were compensated, often with bonds and shares in government enterprises, helping shift wealth from land into industry. This reform sharply expanded smallholder ownership and changed Taiwan’s rural class structure.
In 1953, Taiwan put a first four-year economic development plan into operation, aiming to increase agricultural and industrial production and stabilize prices and external payments. The plan tied together U.S. aid, government planning, and sector programs rather than treating them as separate projects. This strengthened the link between rural reform and industrial strategy.
After reform, many farm households kept a larger share of output and invested more in land improvement, tools, and education. JCRR programs in irrigation, improved seeds, and rural credit supported these changes and helped raise agricultural growth in the 1950s. The result was both higher rural living standards and more domestic resources for industrial development.
In 1960, Taiwan promulgated the Statute for Encouragement of Investment, using tax incentives and other measures to support industrial investment. This policy helped accelerate the shift from an agriculture-dominant economy toward manufacturing. It also fit a broader transition toward export promotion and industrial upgrading in the 1960s.
By the early 1960s, U.S. economic support shifted away from grants toward loans with tighter repayment terms. This reflected outside confidence that Taiwan had built stronger administrative capacity and a larger domestic capital base. The changing aid relationship increased pressure to expand exports and strengthen industrial earnings.
On June 30, 1965, the formal U.S. aid program to Taiwan ended, after a 15-year period often cited as an effective use of development assistance. The end of aid did not stop growth, but it made export earnings, domestic savings, and industrial competitiveness even more important. Taiwan entered a new phase focused on sustaining development with its own resources.
In December 1966, Taiwan opened the Kaohsiung Export Processing Zone (EPZ), a special area designed to attract investment for export-oriented manufacturing. EPZ firms could import parts and materials with simplified procedures and focus on exporting finished goods. This helped Taiwan scale labor-intensive exports and deepen its industrial takeoff.
Starting in 1974, Taiwan launched the Ten Major Construction Projects, a major infrastructure push that included transportation, energy, and industrial projects. The program aimed to remove bottlenecks—such as power capacity and transport links—that could limit industrial expansion. These investments supported a move toward heavier and more capital-intensive industry in the 1970s.
By 1979, the Ten Major Construction Projects were planned to be completed, marking a visible end point for a 1970s state-led infrastructure surge. Together with earlier land reform, agricultural modernization, and export-oriented industrial policies, these projects helped Taiwan consolidate its transformation from a rural economy into an industrial exporter. The combined outcome was a more productive farm sector, a broader base of small proprietors, and a stronger platform for the next stage of industrial upgrading after 1979.
Taiwan's Land Reform and Industrial Takeoff (1949-1979)