During the early period of industrialization Taiwan tried to create domestic markets for its goods. During the period from 1960 to 1973 Taiwan pursued export expansion in the area of industrial goods. During this period U.S. aid directed at Taiwan declined as did the islands geopolitical significance. To make up for this decline Taiwan focused on increasing its exports. According to Gold this was because the changes in the Taiwanese economy brought about a middle class, a better educated populace, and a dispersion of industry through out the country.
Gold calls the time of industrial upgrading and the emergence of a political opposition.
During this period Taiwan faced the oil shock, and increase in export prices due to a labor shortage that doubled workers salaries, a further loss of geopolitical prestige, and the growth of dissent and political opposition. Taiwan industrially during this time improved the quality and quantity of its exports. The Taiwan industrial model was that of a elite run bureaucracy that tightly controlled its nations citizenry in authoritarian ways. This authoritarian government was able to effectively channel the energies of Taiwan toward modernization. This authoritarian government became a victim of its own success because as living and education standards rose the citizenry demanded a shift away from hard authoritarianism.