In 1949, a rag-tag Chinese nationalist army (Kuomintang or KMT) fled the communist army of Mao Tse-tung and took refuge on the island of Taiwan — officially taking the name Republic of China. The KMT controlled the island until the election of Chen Shui-bian of the Democratic Progressive Party (DPP) in March this year. The mainland People's Republic of China maintains a “one China” principle, stating that Taiwan is just a renegade province. Although relations between the island and the mainland have always been tense, the election of a member of the DPP, which is known for making strong statements favouring Taiwanese independence, has irked mainland leaders.

The influx of ethnic Chinese from abroad, mostly but not exclusively returnees of Taiwan origin, has fuelled Taiwan's electronics boom, and many of the highest rungs of Taiwan's academia are populated by Chinese who have come, or returned, to Taiwan in the past decade. The government has dedicated itself to making Taiwan a “progressive sci-tech island”. It has already shown ingenuity in establishing science parks and industrial institutes, which gave rise to the successful electronics industry. The government budget for science and technology for 2001 stands at NT$53.1 billion (US$1.7 billion), up 10.3% on 2000.

The government continues to promote both academic and industrial R&D. Public R&D spending has increased yearly by 8–10% for each of the past five years, and aggressive government policies have encouraged private research so that total R&D spending (government plus industry) has jumped from 1.0% to 2.0% of GDP since 1986. This puts Taiwan on par with the United Kingdom, France and Germany but still behind the United States, Japan and Korea. This has boosted academic science, though some see an “overly democratic” emphasis on even distribution of research funds as preventing development of some of the best talent. But Taiwan's international openness has created a fluidity in terms of capital, technological and human resources that has made it a vital node in the global economic, technological and scientific web.