Historical Attitudes and Implications for Path Dependence: FDI Development and Institutional Changes in China

44 Pages Posted: 26 Aug 2006

See all articles by Xueyuan Zhang

Xueyuan Zhang

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Barbara Krug

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); Erasmus Research Institute of Management (ERIM)

Patrick Reinmoeller

Cranfield School of Management, Cranfield University; Erasmus University Rotterdam (EUR) - Department of Strategic Management and Entrepreneurship

Date Written: January 2004 1,

Abstract

This paper attempts to explain how institutions in the reform era of China have evolved by looking into the FDI policies and regulations. As history matters, we dont look solely into the previous direct stage to the reform era, and rather look into a longer history starting from prior to the 14th century. The study shows that a dimension of time is crucial to understand institutional change in China. Though the initiation of the open-door policy in the reform era is commonly regarded as path-break event, we claim that this institutional change is a path dependent event from a longer historical view. The path takes a zigzag that is shaped by interaction among interested parties: the central government, local governments and economic agents (foreign investors in terms of the open-door policies). The historical study shows that mutual needs and their behaviours influence their attitudes which further influence institutional building. This also further implies how Chinese institutions may evolve in the future and what we should concern more about institutional changes in transitional economies.

Keywords: attitudes, institutions, path dependence, China, FDI policy

JEL Classification: M, F23, P31, M14, P33, P35, P26

Suggested Citation

Zhang, Xueyuan and Krug, Barbara and Reinmoeller, Patrick, Historical Attitudes and Implications for Path Dependence: FDI Development and Institutional Changes in China (January 2004 1,). ERIM Report Series Reference No. ERS-2004-112-ORG. Available at SSRN: https://ssrn.com/abstract=650831

Xueyuan Zhang (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

Barbara Krug

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Patrick Reinmoeller

Cranfield School of Management, Cranfield University ( email )

United Kingdom

Erasmus University Rotterdam (EUR) - Department of Strategic Management and Entrepreneurship

RSM Erasmus University
Netherlands

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