A s the Asian economic crisis mounts, the cries for bailouts have become deafening. And while inflation was shooting up by 12 percent in Indonesia and 8 percent in Thailand, it rose a scant 0.2 percent in Taiwan. To a greater degree than other Asian nations, Taiwan harbors a deep respect for democracy, the rule of law, and economic freedom. To maintain a healthy economy, Taiwan's government has largely avoided interfering with the right of its people to take risks, create wealth, and keep what they earn. Money-losing ventures are allowed to go bankrupt, rather than being propped up by government assistance.
Taxes remain low, regulations minimal, and spending restrained.
Specifically, Taiwan has encouraged the formation of small and medium-sized enterprises. These nimble companies are better able to adapt to the ever-changing global economy, and are less likely than larger enterprises to form bonds of corruption with government and banks on a scale that could jeopardize the entire economy. Moreover, the sheer number of these companies means greater competition, which lessens the risk of poor management and the kind of large-scale industry failures that lead to a national crisis. And where there's no crisis, there's no need for an international bailout. All this has enabled Taiwan to buck the Asian trend.