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Competing Views on Taiwan's Foreign Investments

Ever since the success of Jean Monnet’s plan for the economic and political integration of Europe in the 1950s, there has been spirited debate about whether growing economic linkages (trade, investment, and transfers of technology) will foster peace and political cooperation in other parts of the world. The crux of this debate revolves around the following question: Do closer economic ties consistently lead to reduced political tension, or are the prospects for improved relations dependent on other factors? Karl Deutsch took an early lead in this discussion and argued that economic links between states (mail and trade) led people in potentially hostile circumstances to understand the perspectives of the other side. This lowered the chances of conflict.1 Robert Keohane and Joseph Nye extended the argument and developed an entire “interdependence school” based on the assumption that closer links reduce strain between states.2 Economists have taken some of these ideas and modified them, asserting that reduced trade barriers can help other forms of integration for a region.3 A simplified version of the interdependence argument, which links economic ties to reduced political tension, is set forth below.