 Despite previous domination of the import-export trade by native Taiwanese merchants, the production, distribution, and the import-export trade was almost entirely under control by the Japanese as new developments of modern capitalism began to take root in Taiwan.From the early to mid twentieth century, Taiwan was predominantly an agricultural economy despite its lack of arable land located in a subtropical zone prone to plant diseases and bugs that did not make the island conducive for agriculture.To cope with Taiwan's natural disadvantages, Japan began investing in intensive research and development and established rural institutions to create new methods of agricultural cultivation such as modern irrigation systems, newer and improved breeds of plants and crops that resisted changes in weather patterns, diseases, and bugs.