Taiwan is one of the original Asian tigers; a small group of economies on the Pacific rim where economic growth took off spectacularly in the 1960s.

In 1997 when the whole region was hit by the wrenching Asian financial crisis, Taiwan got off relatively lightly.

The countries at the eye of the storm had to contend with sharp economic contractions in the following year - in the case of Indonesia output fell by 13% and even boomtown Hong Kong had to contend with a recession.

Taiwan's growth had a more secure footing than other regional economies

In Taiwan, however, the result was little more than a slowdown in the rate of growth and some turbulence in the financial markets. Unemployment remained low.

It is striking that the territory's businesses ran up far fewer debts than their counterparts in other East Asian countries.

Nor did Taiwan have the large deficit in trade with the rest of the world that was a sign of strain in other parts of the region. Instead Taiwan had a surplus.

It also had a stronger banking system.

Surviving the storm

The worst hit countries had very high rates of investment - so high that many economists thought them excessive and certainly too high to be financed by domestic savings.

That left the countries dependent on inflows of foreign investment which stopped rapidly when the crisis started making the situation even worse.

Hong Kong fared far worse in the crash

By contrast Taiwanese investment was much steadier, within the limits of domestic savings.

In short, the Asian economic miracle seems to have had a more secure foundation in Taiwan than in the rest of the region

It is certainly a longer established transformation than most of the hardest hit Asian countries.

In 1952, a third of Taiwan's output came from agriculture. Now it is less than 3%. At the same time manufacturing went from 13% to a peak of nearly 40% in 1986, before services started to displace industry.

And in the last decade and a half industry has become increasingly high tech, with technology output such as PCs and computer peripherals accounting for about 40% of all exports.

Shifting sides

Labour intensive industries have shifted to the mainland

Meanwhile, many older style manufacturing operations - such as toys, footwear and clothing - have moved overseas.

In many cases they went to mainland China where Taiwanese firms have invested more than $40bn in the past decade.

These are more labour intensive industries and as Taiwan's living standards have risen, many of these businesses have gone where labour costs are lower.

This has also led to increased trade with China, much of it going via Hong Kong.

But this significant international role is not matched by an influence in economic decision making, a fact which reflects the diplomatic tension surrounding the uneasy relationship with China.

Taiwan is not a member of the International Monetary Fund for example, nor is it a member of the World Bank - both of which require statehood as a prerequisite for membership.

Dynamic growth

Nonetheless Taiwan's rapidly changing economy has grown dynamically. Between 1960 and 1990 the average annual increase in output per person was around 6%, and it has continued to grow.

Since 1986 output per person has risen from $4,000 to $13,000.

There is quite a debate about the reason for this performance.

In the early stages Taiwanese industry was protected from foreign competition. Later there was a concerted effort by the government to encourage exports.

But high levels of education have also been important, and there is a strong culture of business enterprise.

Most forecasters expect the island's strong performance to continue, but experience has shown that Taiwan's tense relationship with the communist mainland can easily lead to anxiety in Taipei's financial markets.

With Beijing once again making hostile noises over Taiwan's elections there is every chance that investors could once again have an attack of nerves.