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Taiwan as an Emerging Foreign Aid Donor: Developments, Problems, and Prospects

Gerald Chan
Pacific Affairs
Vol. 70, No. 1 (Spring, 1997), pp. 37-56
DOI: 10.2307/2761227
Stable URL: http://www.jstor.org/stable/2761227
Page Count: 20
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Taiwan as an Emerging Foreign Aid Donor: Developments, Problems, and Prospects
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Abstract

Taiwan is financially rich but diplomatically poor. It has one of the world's largest foreign exchange reserves. However, only thirty countries recognize it as a sovereign state. Can Taiwan use its economic strength to break out of its diplomatic isolation? One way to do this is to give economic assistance or foreign aid to developing countries. In view of the shortage of funds worldwide available to assist the ever-increasing number of countries requiring help, some recent developments in Taiwan's aid programme are beginning to attract renewed world attention. The establishment in 1988 of the International Economic Cooperation Development Fund marks a watershed in Taiwan's aid policy. This paper addresses the following questions: Why does Taiwan give aid? To whom does it give aid, and why? What is its aid mechanism? How do the quantity and quality of Taiwan's aid compare with other countries? What are the problems and prospects of Taiwan's aid diplomacy? All these questions open up a new area of research on Taiwan's external relations which involves a complicated mix of political, economic, development, and diplomatic issues. A common thread that runs through this paper is the linkage between Taiwan's foreign assistance and its political objective of gaining international recognition. The paper concludes that Taiwan's ability to increase its aid capacity will no doubt ensure that aid can remain a useful, if limited, diplomatic tool and a potentially important economic tool.

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