Structuring of transborder flows of national industrial Capital: Japan in the 1970s and 1980s, and China in the 2000s and 2010s

Abstract

This study employs a broad, “Northian” framework of institutional analysis to investigate the effects of institutions of different national jurisdictions on the structuring of transborder outflows of Japanese industrial capital in the 1970s and 1980s and Chinese industrial capital in the 2000s and 2010s. While general theories, such as the stage theory of industrial development, can explain the growth of national industrial capital in the source country, this study focuses on the effects of institutions on the surge and the regional and sectoral destinations of Japanese and Chinese industrial capital outflows. These institutions are laws, policies and guidelines of the state; rules and normal practices in corporate organization and financing, and mechanisms of state-industry relations in the source country; laws, regulations, policy and practices of the host country in regulating and managing inflow foreign industrial capital; and intergovernmental arrangements for transborder industrial capital flow and operation. The study finds these three sets of institutions formed an effective transborder institutional environment that influenced national industrial capital to invest in certain countries and industrial sectors. The distinct institutional forms of organizing transborder industrial production in Japan’s case then and China’s case now are different from the multilateral institutional approach that dominated East Asia from the 1990s.