In 1960, Japan’s government adopted the Income Doubling Plan, aiming to rapidly expand national income through investment, industrial expansion, and export growth. This policy direction helped firms scale production and plug more deeply into global trade. It set an early model for export-led industrial upgrading in East Asia.
After the 1961 coup, South Korea’s government put the First Five-Year Economic Development Plan (1962–1966) into operation. The plan emphasized building basic infrastructure and raising exports so firms could earn foreign exchange for imported machinery and inputs. This was an early step toward building export-oriented production networks.
In 1964, Japan became the first Asian member of the OECD. Membership supported a broader shift toward liberalizing trade and investment rules, which made it easier for Japanese firms to operate across borders. Over time, this helped Japanese companies coordinate production and sourcing beyond Japan as costs and competition changed.
Japan opened the Tōkaidō Shinkansen on October 1, 1964, linking major industrial regions between Tokyo and Osaka. Faster passenger movement supported business travel, management coordination, and time-sensitive services that matter for complex manufacturing systems. While freight still moved mostly by other modes, this upgrade strengthened Japan’s broader transport backbone for export growth.
On June 22, 1965, Japan and South Korea signed a treaty establishing basic diplomatic relations. The agreements also enabled economic cooperation and financing that supported industrial projects and trade links. These ties mattered for supply chains because they increased trade, technology exchange, and investment flows between the two economies.
On December 3, 1966, Taiwan inaugurated the Kaohsiung Export Processing Zone (EPZ), designed to attract export manufacturers with supportive rules and infrastructure. EPZs helped firms import components, assemble goods, and ship them out efficiently, linking Taiwan to multinational buyers. This became an important institutional tool for export-led manufacturing and early electronics supply chains.
In 1968, South Korea created the Pohang Iron and Steel Company (POSCO) to develop an integrated steel industry. Domestic steel was a key upstream input for shipbuilding, machinery, autos, and infrastructure, all central to export competitiveness. Building this foundation reduced dependence on imported steel and strengthened Korea’s ability to supply growing manufacturing networks.
In the 1970s, South Korea launched the Heavy and Chemical Industry (HCI) Drive to build sectors like steel, petrochemicals, machinery, and shipbuilding. This policy shifted the economy from mainly light-industry exports toward capital-intensive industries that require deeper supplier networks. It expanded Korea’s role from assembling goods to producing key intermediate inputs used across global supply chains.
Beginning in 1974, Taiwan pursued the Ten Major Construction Projects to upgrade highways, ports, airports, power supply, and major industrial facilities. These public investments addressed bottlenecks that limited export growth, especially for heavy industry and modern manufacturing. Better infrastructure lowered shipping and energy constraints that shape supply-chain reliability.
On February 20, 1974, Hon Hai Precision Industry (later widely known as Foxconn) was founded in Taiwan. Firms like this helped expand “contract manufacturing,” where specialized companies build products for global brands. This business model supported the rise of cross-border supply chains by separating design, marketing, and assembly across different locations.
On December 15, 1980, Taiwan established the Hsinchu Science Park to support high-technology industries. The park helped cluster research, skilled labor, suppliers, and manufacturing—conditions that are especially important for semiconductors and electronics. Over time, this strengthened Taiwan’s position in export-oriented electronics and component supply chains.
On September 22, 1985, major economies signed the Plaza Accord to weaken the U.S. dollar, contributing to a sharp appreciation of the Japanese yen. A stronger yen made exporting from Japan more expensive, pushing many Japanese firms to invest in overseas production. This helped accelerate Japan-centered regional production networks and deeper supply-chain links across East Asia.
Following the post-Plaza yen appreciation, Japan’s foreign direct investment (FDI) into East Asia rose rapidly during 1986–1989. New plants and supplier relationships spread production stages across borders, linking parts-making, assembly, and shipping into regional networks. This reinforced export-led supply chains involving Japan, South Korea, and Taiwan as key manufacturing nodes.
By around 1990, Japan, South Korea, and Taiwan had built complementary roles in global manufacturing—combining advanced capital goods and components with scalable export production. Industrial policy, infrastructure investment, and firm networks helped these economies move from basic exports toward complex electronics, machinery, and other high-value goods. This period left a lasting legacy: East Asia became a central region for global supply chains that continued expanding in the decades that followed.
East Asian Export-Led Supply Chains: Japan, South Korea, and Taiwan (1960–1990)