This article analyses Taiwan's economic changes that have occurred from the Japanese colonization of Taiwan in 1895 to the recent Asian financial crisis, focusing on the interplay between policy and structure. Pre-colonial Taiwan was a frontier society with a settlement economy, primarily subsistence-based, and with a thin state structure, politically barely governed by the Qing dynasty. Under Japanese rule, Taiwan was turned into an essentially open economy and an agrarian base of the Japanese Empire. In the post-Second World War era, the Taiwanese economy under the Nationalist regime was briefly turned inward for import substitution industrialization, but rapidly transformed into one based on industrial exports in labour-intensive sectors, and increasingly on modern services as well. By the end of the century, Taiwan had already become the world's third largest maker of information technology products, behind the United States and Japan. The permutation of ownership structure was equally drastic. Dominant Japanese capital in the pre-war era became omnipresent state capital in the immediate post-war era. Subsequently, however, indigenous private capital overwhelmed the industrial sector and, towards the end of the century, made inroads in the financial sector as well.