The rapid development of states in East Asia attracts scholars to discuss the effect of the state in economy from different points of view. Neo-classical economic theory claims that the role of the state is secondary and market mechanism is the major engine to drive economy. Traditional state-centered theory thinks that neo-classical economic theory neglects the importance of the state and claims that industrial policies of the state are the reason of the rapid growth in East Asia. However separation between the state and the society leads to simplifications and limits of traditional state-centered theory. After states in East Asia apply the democratization and freedom of the economy, Evans and Weiss’s policy network theory becomes the main stream to explain the development of the states in East Asia.
In the past, the relative studies about the development of LCD industry in Taiwan were scarce. Few people concerned about the relationship between states and industries. Based on the interaction of states and industries, this thesis discusses how the policy of the state influences the development of LCD industry in Taiwan.
The results shows that the state is passive and lets the companies compete freely in the market in the beginning of LCD industry. In the 90’s, the state turns to be positive and intends to lead the development of TFT-LCD industry. However to integrate the democratization and opinions of companies is difficult. The companies are hard to acquire the important technology they need and the economy is in the depression in that time. These factors cause LCD industry unable to develop well.
The financial crisis in 1997 and Korea entering the market force the companies of Taiwan to cooperate with the ones of Japan and start to produce the large size TFT-LCD. The state turns to focus on the establishment of the industrial environment. In the efforts of the state and the companies in LCD industry, the LCD industry expands quickly and industrial structure is gradually close to complete. In the recent years, Taiwan already has become second best state in the LCD production.
However it does not mean that Taiwan has already stood firm. The inflow of huge sum capital and the establishment of intellectual property are topics urgent to be solved. Finally to maintain the close interaction of states and industries contributes to the development of LCD industry.