Economic Statecraft and Strategic Autonomy: Taiwan’s Post-Developmental Realignment in Cross-Strait Relations

This paper examines Taiwan’s strategic shift from a classic developmental state model toward a post-developmental form of economic statecraft aimed at achieving strategic autonomy under growing cross-strait asymmetry. Drawing on developmental state theory, small-state diplomacy, and geoeconomic analysis, this paper argues that rather than disengagement from globalization, Taiwan’s economic policy since the late 2010s reflects a selective realignment that leverages its technological centrality to resist external coercion. This is particularly evident in the field of semiconductors. This study analyzes Taiwan’s transformation in three phases. These include state-led industrialization, deep economic entanglement with China under the Economic Cooperation Framework Agreement (ECFA), and a diversification strategy shaped by engagement through the New Southbound Policy and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This paper finds that Taiwan has increasingly deployed trade, innovation policy, and multilateral economic instruments not merely for economic gain but as tools of sovereignty-preserving statecraft. Rather than pursue isolation or hard decoupling, Taiwan is constructing a form of strategic openness by insulating itself where necessary while reinforcing international embeddedness. This approach offers a critical case of how small states with advanced industries can navigate asymmetric interdependence through calibrated economic agency rather than confrontation. The findings underscore the rising salience of geoeconomic strategy in Taiwan’s external policy in a contested Indo-Pacific order.