This thesis examines Taiwan’s foreign policy toward Latin America and the Caribbean (LAC), focusing on the cases of Saint Lucia, Guatemala, and Honduras. It argues that the stability of Taiwan’s diplomatic alliances in the region is shaped by the interaction between Taiwan’s diplomatic supply capacity and the financial vulnerability of its allies. Drawing on theories of small-state diplomacy and asymmetrical power relations, the study develops a 2×2 typology that explains diplomatic outcomes according to two variables: Taiwan’s capacity to provide sustained diplomatic and developmental engagement and the degree of financial vulnerability faced by
allied states. While China and the United States influence the broader geopolitical environment, the study contends that diplomatic stability and switching are primarily determined by the
interaction between Taiwan’s domestic political capacity and the economic and political conditions of partner governments.
Using a qualitative comparative case study approach, the thesis combines historical analysis, government reports, policy documents, international financial data, and secondary literature to
examine patterns of diplomatic continuity, conditional alignment, and diplomatic defection. On the supply side, the study analyses how ruling party orientation, democratic accountability, legislative oversight, public opinion, and budgetary constraints shape Taiwan’s diplomatic engagement. On the demand side, it examines how fiscal vulnerability, infrastructure needs, development priorities, and political leadership influence recognition decisions among Taiwan’s
allies. The empirical findings reveal that financial vulnerability alone does not determine diplomatic outcomes. Instead, alliance durability depends on the degree of compatibility between Taiwan’s
2 diplomatic supply capacity and the developmental demands of allied states. The findings demonstrate that Taiwan’s transition from traditional transactional diplomacy toward development-oriented cooperation, technical assistance, healthcare partnerships, agricultural modernisation, and capacity-building initiatives has strengthened institutional trust and contributed to diplomatic stability in some cases, particularly Saint Lucia. Conversely, the
Honduras case illustrates how acute fiscal pressures, large-scale infrastructure demands, and China’s superior financing capacity can generate incentives for diplomatic realignment when
allied demand exceeds Taiwan’s available resources. Guatemala, meanwhile, demonstrates that relative fiscal stability, institutional continuity, and long-term diplomatic trust can reinforce durable alliances even in the presence of Chinese economic incentives.
Ultimately, the study argues that Taiwan’s diplomatic survival in the LAC region depends on its ability to balance domestic political constraints with flexible, sustainable, and development-oriented engagement strategies. More broadly, the thesis contributes to the
literature on small-state diplomacy by demonstrating how diplomatically constrained states employ adaptive foreign policy strategies, development cooperation, and institutional trust to
preserve international space within asymmetric geopolitical environments.

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