In recent years there has been renewed interest in the social policies of Asian countries. The aim of this paper is to investigate Taiwan's National Pension debate after democratization. This topic is significant not only because of its theoretical importance for comparative welfare state studies, but also because of its practical relevance for identifying the political-economic conditions for welfare state formation in the developing world. Why is it that democratization has not led automatically to the introduction of National Pension System? Certain internal factors should be considered. Differentiated social insurance schemes as a legacy of authoritarian regime, and many trivial benefit schemes as a result of electoral contests after democratization cause great difficulty in establishing a new integrated system. In understanding welfare state formation of newly democratized countries, institutional legacy must be looked into more carefully. On the other hand, there are also some external factors that require examination. Globalization fuels international economic competition, and undermines fiscal autonomy of national governments. Thus, new president Chen, whose DPP (Democratic Progressive Party) had promised to establish a "welfare state", could not avoid declaring the postponement of the introduction of National Pension System. We should take into account that the international circumstances of Taiwan's welfare state formation are quite different from those of advanced countries in the post-war era.

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