“Service industry” generally refers to “profit or non-profit individuals and organizations that are involved in the production, marketing, management, or distribution of services.” The official definition of service industry, according to the “Standard Industrial Classification System of R.O.C,” refers to any industry that is not categorized as A. agriculture, forestry, fishery and animal husbandry, B. mining and quarrying, C. manufacturing, D. electricity, gas and water, E. construction. Moreover, according to the Standard Industrial Classification System of the R.O.C (Rev.8,) service industries include the wholesale and retail trade, transportation and warehousing, accommodation and food, information and communication, finance and insurance, real estate, professional science and technical services, support services, education service, health care and social assistance, art, entertainment and recreation, and other services.

       In early stage of human history, service industries played a role in commodity trading for people’s needs, and to the period of agricultural and industrial exports, the commodity trading turned into the trading of agricultural and industrial products. Behind the trading, it required a financial system to support the trading, but in the early stages, the financial system was limited to simple debit and credit. Until the Japanese colonial period, a systematical financial system had not been established, and not until financial openness in the 1990’s did a more diverse financial instrument system appear.

      When Taiwan was in its agricultural period, the service industry mainly included public and government-owned services and the wholesale and retail trade sectors. In the industrial period, apart from the sectors mentioned above, the proportion of transportation and warehousing increased year by year as a result of long-term export-oriented policies in Taiwan. After the 1990’s, as people’s incomes increased, accommodation and food, professional scientific and technical services, art, entertainment and recreation, and health care and social warfare services all developed vigorously, due to increasing domestic demands. Furthermore, the government’s deregulation of service industries led to significant developments in the areas of telecommunication, finance and insurance and educational services.

        As a result, the development of the service industry during the last hundred years has been driven by two factors. From the perspective of demands, including changes in income levels and changes occurring in the industrial structure, increases in income stimulated an alteration in people’s consumption structure, and the changes in the industrial structure forced some support services to adjust in regard to their developmental patterns. However, without the coordination of the government’s deregulation of service industries, new-demand services could only linger around the boundary between regulatory and actual demands. Thus, the second aspect of the development of service industries is the government’s role, including regulating and deregulating, transforming government-owned industry to private industry, introducing foreign investment ad technologies, and making concrete policies intended to promote the development of service industries. Under some particular circumstances of politics and the economy, in the Japanese colonial period and the early period after the retreat to Taiwan, the government had to regulate some specific services, such as finance, telecommunication, and media, among others. Nevertheless, as the economy developed, government deregulation resulted in the explosion of potential demands for services. Many services, such as gas stations, bank and telecommunication services, had experienced over-development in the early stage after deregulation and gradually integrated afterwards. Apart from deregulation, the government transferred government-owned industries to the private domain, which led to some service markets becoming open to competition, for example, Chunghwa Telecom, the Taiwan Motor Transport Company, the First Commercial Bank, Hua Nan Commercial Bank and Chang Hwa Commercial Bank, among others. The third factor is that the government allowed the entry of foreign investment and technologies and broadened the view of the service industry in the country to include the establishment of foreign banks, the entry of foreign chain stores and franchises, and so on. As the industrial structure continuously transformed, the service industry has become a major force in economic development. As for the government, its role transformed from regulating and deregulating to promoting the development of service industries in Taiwan. From the perspective of the supply side in the development history of the service industry, the government has played a significant role.

       The connotation of the overall service industry in the early developmental history of Taiwan was as a supporting role to other sectors, mainly trading and finance. At the present time, however, along with the development of industry, increases in incomes and government’s deregulation have led services to become more diverse and to advance toward refinement and specialization, becoming one of the major forces in economic development in the country. The following specifically illustrates the background of Taiwan’s economic development and the changes in the development of the service industry.

        It is more appropriate to delve into the development of Taiwan’s service industry from the vantage point of local industry development, since in the early period of Taiwan’s one-hundred-year history, it served a supporting role to other sectors and the needs of the population. As for the commerce and finance of the R.O.C. at the time when the government was still in mainland China, “The Economic Development before 1949” of Min-xiong Shih can serve as a reference.