Pacific Affairs: An International Review of Asia and the Pacific

Volume 73, No. 2

 

Foreign Aid, Domestic Institutions and Entrepreneurship: Fashioning Management Training Centres in China
By David Zweig

 

Abstract

The literature on internationalization suggests several ways in which external forces can affect domestic institutional change. Explanations for the extent of the foreign impact include changes in international relative prices, capital flows into a country which create new organizations or restructure existing ones, external demand for structural adjustment, and transnational intellectual communities, which introduce universal norms into an otherwise non-conforming country. Yet domestic forces, such as political structures and institutions ? including organizational ideologies, commitments to domestic constituencies, industrial structure or path dependence, local government entrepreneurship, and the local policy environment — all undermine the influence of external forces.

This paper looks at the impact of overseas development assistance on three management training centres to assess whether foreign or domestic forces determined the rules, nancial allocations, and pattern of organizational behaviour. It nds that domestic bureaucratic interests imposed powerful constraints on these new organizations. At the same time, foreign capital and global linkages helped these units evade some constraints that might have impeded their development. Despite China's image as a strong state, donors exerted signicant influence over these projects. But each organization's property and internal rules, its domestic economic and bureaucratic environment, and the level of entrepreneurship of its leaders determined its pace and direction of development.