Rural industries were a key factor of rapid economic development in Taiwan after the early 1950s (Rains, G. 2007). The rural industry growth rate has several times surpassed not only the GDP growth rate but also the agriculture growth rate (Knight et al 2004). In East Asia, the development concentrated extremely to the megalopolises resulting in increases of regional income inequalities (Hayami, Y. 2006). Labor-intensive industries important to the early stage of industrialization in Taiwan were located in megalopolises instead of the rural hinterland. After the economic take-off period this situation gradually changed; the importance of rural industry in economic development shifted to the peripheries and turned to be a key factor for improving livelihood for people in marginal areas. The size and structure of rural industry also changed during this process.

This process has resulted in very uneven development in geographic space in Taiwan, with depopulation in the marginal areas and changing, weakening communities on the peripheries. Many of the Aborigines in Taiwan, who lives in the mountainous areas, migrated from the villages to the large urban centres during the economic take-off to get better job opportunities. Because benefits from the rapid development were not shared equally within the society and in the geographic space, certain groups – minorities located on the peripheries – could find themselves in marginal situation both socially and geographically. Researchers have questioned rapid economic development in Taiwan and its relation to Taiwanese Aborigine people (Hsu, M., Li, Y. 1989).

Hilly and mountainous areas both in Taiwan and Japan (Odagiri, T. 2012) are less-favoured, peripheral areas. Japan has long been the most advanced country in developing rural industries in marginal areas, e.g. the “One village one product” rural development strategy in Oita prefecture in the late 1970s (Natsuda K. et al. 2011). In creating rural development programs, both Taiwan and South Korea and, to a smaller degree, China all have looked to Japan as the model (Looney, K. 2012). The regeneration effort is usually focused on new rural communities in Japan, which are self-created and self-initiated organizations (Asamizu, M. 2012). The self-initiated activities within the framework of rural industries are for preservation of local resources as the base for a new industry.

It is a strategic issue in Taiwan’s regional policy to develop the mountainous peripheral areas inhabited mostly by Aborigine population and to improve the local communities’ quality of life. This research on local rural industries could provide an understanding of what are the key factors for local development in Taiwanese peripheries.

To understand these issues, there are four main groups of questions we attempt to answer: (1) importance of Japanese experiences in community based rural industry development and their usage as model in Taiwan, (2) Aborigine communities and their relation to rural industries, i.e., level of self-organization, (3) types of rural industries in Taiwan, and (4) their sources, effectiveness and sustainability.