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Taiwan has been moving toward democracy, with a dramatic transition taking place in the past decade. Critical to this transition is a restructuring of the relationship between the state bureaucracy and society. This study focuses on democratization's effect on Taiwan's bureaucracy. In particular, it seeks to examine such aspects of bureaucratic transformation as bureaucratic decisionmaking, legislative-bureaucratic politics, interest group-bureaucratic relations, the expansion of local autonomy, and civil service reform. This study finds that the bureaucratic state is facing a great challenge from political, legislative, and societal forces. The old type of insulated bureaucratic planning and decision making is no longer possible, the bureaucracy is losing its KMT patrons, and bureaucrats are finding themselves answerable to political pressure, legislative oversight, and interest group lobbying. While the bureaucracy has lost its previous level of discretion in terms of macro-management and the formulation of developmental policies, the bureaucratic state has not withered away.
Taiwan has been moving toward democracy since 1986 when martial law was lifted and opposition parties were allowed to form. The more dramatic transition took place in the past six years during which Taiwan held direct elections for the Governor of Taiwan and the Mayors of Taipei and Kaohsiung in 1994 and its first presidential election in 1996.  Critical to this transition is a restructuring of the relationship between the state bureaucracy and society. The recent expansion of political competition raises two new questions: What effects does democratization have on Taiwan's bureaucracy? And how is this influential bureaucracy adjusting to democratic politics? Based on interviews and data collection conducted in Taiwan in 1994 and 1998, this article seeks to study these questions by examining several aspects of bureaucratic transformation. It opens with brief overviews of the role of the bureaucracy and bureaucratic decision making and goes on to examine legislative-bureaucratic politics, the new relationsh ip between interest groups and the bureaucracy, the expansion of local autonomy, and civil service reform.
There is wide recognition of the importance of the bureaucracy in Taiwan's economic development, with many authors pointing to its crucial role as part of the developmental state. Yet few scholars have studied bureaucratic adjustment in the current democratization process in Taiwan. Under authoritarian rule, most analysts saw Taiwan's bureaucracy as able to make and implement policies effectively due to its relative autonomy and insulation from politics (Wade 1990; Gold 1986; Winckler and Greenhalgh 1988). Indeed, at that time there was no legislative oversight of the bureaucracy, and since most of the bureaucrats were part of the ruling elite, bureaucratic accountability was synonymous with political loyalty. Insulation from politics meant that the bureaucracy was not under public pressure or scrutiny when it came to decision making. Have those features changed in terms of bureaucratic functions and effectiveness since democratization? By looking into the bureaucratic restructuring and adjustment to the new political process, this article finds that the semi-autonomous bureaucratic state is facing a great challenge from political, legislative, and societal forces. The old type of insulated bureaucratic planning and decision making is no longer possible. The bureaucracy is losing its patrons in the governing party, the Kuomingtang (KMT), and bureaucrats have become answerable to political pressure, legislative oversight, and interest group lobbying. This raises the question of whether bureaucratic restructuring has changed, or might change, the effectiveness of Taiwan's developmental state, which I return to in the concluding section.
Declining Bureaucratic Decision-making Power
Taiwan's industrial deepening, democratization, and the rise of mass politics greatly reduced bureaucratic insulation and thus bureaucratic power in decision making, making bureaucrats more susceptible to public pressure, new economic interests, and political will. The state bureaucracy has long been responsible for economic intervention, macroeconomic management, and sectoral guidance. Under the one party dominant system, state technocrats and bureaucrats were given special status in making economic and administrative decisions. Statist literature attributed the success of the East Asian NICs to their states' exercise of various policy instruments and forms of intervention, and to politically-insulated, powerful bureaucracies that steer industrial policy and developmental strategy (Johnson 1985; Amsden 1988: 142-175; Haggard 1990; Deyo 1987; Chang and Rowthorn 1995; Chu 1989: 647-672). In Taiwan, there was virtually no bureaucratic accountability; economic bureaucrats were answerable only to the KMT top lea dership. The KMT elite sought to recruit bureaucrats, and promoted and indoctrinated them as a part of the KMT establishment. The bureaucratic administration was interlocked with party apparatuses through patronage appointments and networks, resulting in the overlapping of party and state personnel (Cheng and Haggard 1992:111). Another reason for the prominence of the state economic bureaucracy was the large presence of state-owned enterprises (SOE) in the economy. A unique feature of the SOEs is the KMT's ownership of and investment in them. The open book value of the KMT's investments in nine companies listed in the Taiwan Stock Exchange and twenty-seven public companies totaled $2.4 billion by the end of 1991.  State-owned enterprises monopolized many industrial sectors such as energy, public utilities, fertilizers, sugar-refining, tobacco, steel, shipbuilding, heavy machinery, and defense (Wade 1990: 272-275). The state-enterprise sector received total investments in the 1970s amounting to more than a third of the gross domestic fixed capital formation, and its total asset values surpassed the asset value of Taiwan's top 500 private companies by several times (Chu 1987; Chen and Chu 1992). The large SOE sector gave rise to bureaucratic planning power and fostered bureaucratic-SOE networks that further advanced bureaucratic presence. SOEs became a power base for state economic bureaucrats to conduct economic planning, allocate resources, regulate competition, and above all, expand bureaucratic influence in economic decision making.
The initial stimulus for changing the role of the bureaucrats came as Taiwan entered into the 1980s. Economic liberalization and currency appreciation that took place as the result of U.S. demands and pressures from the private sector restructured state-business relations and compelled economic bureaucrats to recognize and adopt new policy instruments (Chu 1992: 137-138). These bureaucratic efforts included broadening private participation in economic planning and decision making, creation of supra-ministerial advisory bodies, such as the Science and Technology Advisory Group (STAG), and industrial deepening through joint research projects to spin off new high tech industries from microelectronics, telecommunications, bioengineering, and material science to nuclear energy and aerospace. As a result, various high-tech sectors sprang up around the "strategic nodes of state-run R&D organizations and finance institutions," and became a new bureaucratic power base (Chu 1992: 141). While the bureaucratic reorienta tion resulted in a new policy network based on industrial upgrading and planning, high-tech research, and state-private joint ventures, it also opened up the bureaucratic decision making process and subjected the bureaucracy to public pressure.
The democratization process has also reduced the capacity of state bureaucratic agencies to make long-term developmental planning. The Council for Economic Planning and Development (CEPD) under the Executive Yuan (the cabinet) had been a powerful government organization staffed by career bureaucrats and professionals responsible for the overall planning of long-term economic development, the coordination of economic policy, and the activities of related ministries and agencies. Despite its years of autonomy and insulation from political pressure, however, the powerful CEPD began to feel the heat of democratization in recent years. Various interest groups, political parties, and local residents and governments started actively making demands on economic planning and raising issues to the CEPD (Cheng and Haggard 1992: 112-113). Its ability to steer economic development has been challenged by the increasing grass roots participation in the political process. For example, the proposed fourth nuclear plant was st alled by strong mass opposition in 1986, especially in Kung Liao where the plant was long planned for construction. Environmental groups, Kung Liao residents, and the county government battled with police to demonstrate their opposition. The Executive Yuan finally made a compromise by agreeing to pay 1 percent of the total construction …