Economic development has been often closely interlocked with political development in many countries. The process of democratization in the Republic of China on Taiwan has been important subject of study to many sinologists for many years. Many praises the development of democracy in Taiwan to prove that the system of democracy is much better than any other political system. Others denounce Taiwan as a greedy island. The author does not challenge that the economic development has brought many social evils and the system of democracy is a good political system. Nonetheless, it is the intention of this paper to discuss the economic development and its impacts on the political development in this island-country in order to provide a better understanding of the Republic of China on Taiwan.