Globalization is one of the most-discussed issues these days because of its profound and damaging impacts on some countries around the world. The world has become increasingly interdependent, linked by computer networks and high-tech information technology. This book is the result of four years of study by the MIT Industrial Performance Center and is the first publication dealing with Taiwan and globalization. It follows a trend established by well-known universities and scholars trying to study the phenomenon and its impact on developed as well as developing countries. Taiwan has been described as a miracle in economic and democratic development because of its great achievements in those two areas. The question often asked is whether Taiwan is being transformed by globalization and what will be the future of its economic miracle?

There are lessons to be learned in this case. Both Suzanne Berger and Richard K. Lester believe that Taiwan is a critical case in the study of globalization in advanced societies with high wages. It is a critical case because of its relationship with mainland China. Goods, capital, services and manpower flow freely across borders between the two nations, presenting both dangers and opportunities on both sides. "Taiwan today undoubtedly faces extraordinary pressures from globalization, particularly given the island's traditional focus on high-end manufacturing," says Edward S. Steinfeld, who studies Taiwan's weakness in the face of a rising China. In such a situation, Taiwan has to play catch-up with technological progress in the mainland. But the author points out that Chinese electronics are mostly low-end products while most of high-tech exports are produced by foreign-owned firms in the mainland. Steinfeld says the PRC favors foreign firms that make high-end products because of its lack of knowledge in those areas and because its traditional institutions have not yet been reformed. Taiwan, on the other hand, has remained deeply involved in high-tech networks around the world, particularly in California's Silicon Valley. Taiwan is recognized for its highly-valued manufacturing products, but it suffers from a lack of security because of the conflict across the Taiwan Strait. The political relationship between the two sides remain unresolved, aggravated by China's declaration to use force should Taiwan declare independence. Such a situation cannot be resolved by trying to increase commercial integration between the two sides, the author says.

In studying the effects of globalization on Taiwan, Suzanne Berger and Richard Lester say Taiwan has heavily invested in the mainland. Statistics showed that Taiwanese investment stood at more than 32 billion dollars from 1992 to 2002. It has benefited from the investment, but it has transferred technological and managerial skills to other countries without being able to "capture and appropriate the stream of benefits of the spillover of these transfers."

Taiwan's semiconductor industry and production of sophisticated wafer foundry chip designs have meant seeking cheap labor in China to cut costs. Moving some of the high-tech information industry to the mainland allowed Taiwan to compete on prices in the world market for high-end products. But both India and China have shown innovation and capabilities in manufacturing products that can rival other countries and they have an advantage because of their vast supply of low-wage workers. Taiwanese companies can move to China but there are serious risks for them because of the unsettled political dispute.

In this timely study of globalization, authors Douglas B. Fuller, Akintunde I. Akinwande and Charles G. Sodini explain the failures and successes in Taiwan's electronics industry while Marcos Ancelovici and Sara Jane McCaffrey discuss whether there should be another North American Free Trade Agreement (NAFTA) in East Asia. NAFTA, which was established to help the economies of Mexico, the United States and Canada, has not produced the economic partnership expected by those countries. Mexico has suffered because of the strong economies of its northern neighbors. The authors say Taiwan can learn from Mexico's failures. The technical side of the study deals with Taiwan's integrated circuit design and software, which is discussed by Dan Breznitz.

The impact of globalization on Taiwan is a lesson that other developing countries with ambitions to develop high-tech industries should learn.