Since 1986, our economy has developed transitions upgrade rapidly. According to recent data, our manufacturing industry is continuing to upgrade. However, the future performance of the industry is still unclear. According to the data of last twelve years (1986~1998), the production index of our manufacturing industry is decreasing. The rate of manufacturing industry’s production to GDP (gross domestic product) decreased from 39.4% of 1986 to 28.1% of 1995. That the growth rate of manufacturing industry was lower than that of the general economy. The investment of manufacturing industry to the value-added of manufacturing industry was about 30% in early 1980’s, but it is less than 20% in 1985, 1986 and 1987. it shows that the willingness to invest was down. although in the latest years it has improved, investment in the manufacturing industry has been falling behind Korea and Japan for a long time. After our long-term trade surplus and dependence on exports, we are confronted with greater pressure of industry upgrade much more than other countries. Upon the impulsion of international economical circumstance change, many corporations adopt foreign investment as their policy of management transition. According to the Taiwan Institute of Economic Research, 60% of foreign investment in mainland China and south-east Asia not only raised the trade between the area and Taiwan, but also changed our production structure and export areas. When newly industrializing countries, including our country, have invested in Mainland China and Southeast Asia, There was a big change in the international division of labor in theses areas. This study will focus on four points: 1. Transition of international trade and the change of the export structures of Southeast Asia. 2. Expansion of our country’s exports to developing countries. 3. Our country’s products replacement by products from developing countries. 4. The achievement of replacement of product from developed countries. In order to comprehend the present status of Taiwan’s industrial development, we explore export structures、product productivity and international competition. From the export structure, we found that the labor-saving, capital-intensive and technique-intensive industries grew rapidly. From the structure of product, the technique-intensive industry shifted to capital-intensive. It means the technique-intensive industry is on firm ground and keeps drawing capital into this industry. According to labor productivities of individual industries, the performance of the petrochemical, firing, electrical and electronics industries were superior to others. Although our technique-intensive products in on upward trend. Labor-intensive products are becoming les competitive. In conclusion, the growth of our manufacturing industry has slowed down, and the rate of our manufacturing production to GDP is also decreasing. This is inevitable in the process of economic development. However the international competitiveness of our service industry is still weak. We should make an effort to push the manufacturing industry to improve until the products of our service industry can be exported in large scale in order to maintain economic development. We suggest that the manufacturing industry should exceed 28% of GDP according to the experience of Japan. Besides, our structure is excessively concentrated in the electronics industry. Too much d\dependence on this sector, may cause the business cycle to fluctuate drastically. The huge surplus to Hong Kong and Mainland China, the large proportion of exports concentrated on Mainland China are also harmful to the stability of our macro economy.