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The purpose for this research paper is to investigate the reasons behind the Chinese Nationalist Party (Kuomintang) initiation of democratization in Taiwan in using the Institutional Revolutionary Party (PRI) of Mexico as comparison. The KMT should be consider as one of the rare hegemonic ruling party in the world to survive democratic transitions intact, even though the nature and structures of the party have been changed tremendously through democratization. The PRI possess the same qualities. However, the reasons for initiating liberalization of the two parties were somewhat different. Ultimately, four explanatory factors (two internal, two external) emerged as the main contributors to the democratization process in Taiwan. They are: first, the development of Taiwanese identity different from that of the Chinese; second, the political demands and activism of a growing middle class due to the economic success; third, the changes in United States foreign policy towards the encouragement of democratization; and fourth and most importantly, the competition with China for support and the recognition from the international community and the need for the Taiwanese government to enhance its appeal to international supporters, particularly the United States. In addition, while the four factors mentioned above all contributed to the KMT-led democratization in Taiwan, the influence of the United State’s foreign policy in the Fast East and its support of democratic states should be considered the most significant factor contributing to the democratization in Taiwan. In sum, the hypothesis proposed by this research paper is that the accumulation and interaction of all four factors made democratization in Taiwan and the end of the KMT one-party dominance inevitable, with the external pressure from the U.S. essentially playing the most significant role in impelling the KMT elites’ decision to liberalize, adopt electoral reform and stop the persecution of the opposition. The theoretical approaches of the paper are as the following: this paper will adopt the definition of “democracy” provided by Linz and Stepan (1978) to serve as guidelines for whether there is democracy in both Taiwan and Mexico. The definition from Linz states that the criteria of democracy are: “ [The] legal freedom to formulate and advocate political alternatives with the concomitant rights to free association, free speech, and other basic freedoms of person; free and nonviolent competition among leaders with periodic validation of their claim to rule; inclusion of all effective political offices in the democratic process; and provision for the participation of all members of the political community. Practically, this means the freedom to create political parties and to conduct free and honest elections at regular intervals without excluding any effective political office from direct or indirect electoral accountability” (Linz, 5). The paper will also posit that Lipset’s take on modernization theory (1959) holds valid in the case of Taiwan. The economic success in the 1970s and 1980s created a large, well-organized middle class that in turn demanded more political freedom, equality and liberalization. In addition, the paper also addresses Linz and Diamond’s (1989) claim that the genesis and maintenance of democracy is ‘greatly facilitated by values and behavioral dispositions, particularly at the elite level, of compromise, flexibility, tolerance, conciliation, moderation and restraint” (Linz, 12). The methodology use by the paper will be comparative analysis on both the KMT and the PRI’s initiation to liberalize. The paper will also provide historical analysis on the nature of the KMT and its 50-year dominance on Taiwan. Lastly, the paper analyzes voter turn-outs and the results of the 2000 presidential election, which validated the consolidation of democracy in both Taiwan and Mexico. Maybe it is because of the geographic distance; Taiwan and Mexico are not often compared and studied together. Even though there are great differences between the KMT and PRI authoritarian regime, the end result of democratization and the eventual ousting of both parties from power were the same. The paper hopes to shed light on the reasons behind an elite-led liberalization by comparing two difference cases with the same end results. [ABSTRACT FROM AUTHOR]