Open up to change, or wither on the vine

In its heyday, Taiwan was the envy of the world. It had had its own “peaceful rise” of sorts with double-digit growth in the 70s and 80s and became one of Asia's four tigers of emerging economies. But its economic dynamism began to erode when Lee Teng-hui came to power in 1988 after the death of President Chiang Ching-kuo.

Pro-independence Lee effectively insulated Taiwan from mainland China, politically as well as economically, to keep Taiwan off the mainland's magnetic field. In the mid-1990s, Lee blocked Taiwan's ambitious plan to become Asia's operations center. Lee feared that plan, drafted by Premier Lien Chan to target the mainland's vast market and to attract international firms to Taiwan, would push Taiwan too close to China.

Lee's 12-year reign of xenophobia was followed by the rise to power of the separatist Democratic Progressive Party (DPP), which clung to power until 2008 when the Kuomintang (KMT) regained power to end the two decades of self-imposed isolation.

Taiwan has wasted 20 precious years on confrontational politics and ideological struggle, leaving its economy on the back burner. As a result, Taiwan's once robust economy began to lose vitality and started to stagnate. It was a “lost generation” for Taiwan, not unlike the mainland's “lost decade” of the disastrous cultural revolution of 1966-76.

When Ma Ying-jeou of the KMT won the 2008 election on a platform of building closer economic ties with the mainland and break the isolation, he lost no time making good on his campaign compromise. Cross-strait transport links were established and the tourist ban on mainland visitors was lifted for the first time in 60 years.

More is in the offing. The Ministry of Education decided last week to recognize the diplomas of a selected number of mainland universities, paving the way for educational interchange. It is an opening up on the cultural front.

But equally important is the conclusion of a formal accord on closer cross-strait economic partnership called Economic Cooperation Framework Agreement (ECFA). It is kind of a free trade arrangement which Taiwan desperately needs to survive and thrive.

You don't have to be an economist to know that the ECFA, which could be signed as early as next spring, would be a win-win deal. At a time when Taiwan is out of the loop of the ASEAN Plus Three — a regional trading bloc like the European Union — how could Taiwan compete internationally?

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