Home Government Role in the Process of Outward Foreign Direct Investment: The Case of China and Russia

The aim of this paper is to examine the role of the home government in the institutional formation of outward foreign direct investment (OFDI) systems in China and Russia. It focuses on the stages of OFDI institutional development since the start of market reforms in these countries, Reference is made to both processes and outcomes involved. It has been uncovered that in each country the state and its agencies have been the principal institutional entrepreneurs in developing the OFDI system. Consequently, the development of OFDI institutions depended heavily on the extent to which state policy was consistent in supporting the regulative, normative and cognitive pillars of the respective institutional systems. The paper brings theoretical propositions and an analytical framework which posits various consequences of political and economic continuity for OFDI institutional development, moderated by the level of institutional entrepreneurship coming from governmental and business sources. Finally a model presenting the role of the home government in the OFDI institutional system development is created and its application discussed.

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