This paper rexplores the history and causes of grwoth of Taiwan's plasticmaterial industry, which lies vertically between the upstream basic petrochemicals and the downstream plastic product sectors. The study focuses on the six common plstics, PVC, IDPE, HDPE, PP, PS, and ABS, which comprise over 80% of the sector. Almost all of them were established along with the state-run upstream naphtha-cracking plants. That is, forward linkage effects were effective. All grew steadily until liberalization in 1986. For those sectors, whose inputs cannot be easily transported, their growth began to be restricted since the late 1980s when local protest postponed the construction of the fifth and sixth cracker. For other sectors their growth has been unhampered. PS and ABS sectors grew rapidly by expanding their exports, especially to the mainland, in the later period. The downstream's demand has been the engine of growth for all six sectors. The backward linkage effects, however, are stronger in those sectors that did not face supply restriction and those that grew faster. The greater the downstream's grwoth rate, the better its prospects, the greater the linkage effects and the faster the midstream's growth. Market structure also matters. Moreover, industrial policy has been instrumental in bringing about industrial upgrading. That is, ladder-climbing does not come automatically for an NIC.