This thesis empirically explores the effects of the four types of international capital inflows on the competitiveness of the Taiwan Import Substitution industry in Taiwan during the period between 1990 and 2009. Adopting the concept of real exchange rate as proxy for the competitiveness index, regression analysis has shown that Taiwan Import Substitution industry has brought about significant positive effects. Regression analysis using standardized variables reveals that the magnitudes of the effects of the four types capital inflows vary whereas the Equity Securities(Liabilities) plays the most important role while the Debt Securities(Liabilities) the second.