Governmental policy preferences and foreign capital allocation: The case of China

Abstract

This paper compares the determination of foreign direct investment and World Bank loans in China, with a focus on the role of its government. The statistical analysis reveals that World Bank loans responded sensitively to the major regional policy changes since the mid-1990s, but foreign direct investment did not. These findings pose an analytic challenge to the “strong” version of the state-centered approaches to the politics of economic development represented by the developmental state literature. However, they lend support for a “weak” version of the state-centered approaches developed by American political scientists Stephen Krasner and Theda Skocpol.