Continuing Towards a Comparative Institutional Analysis In Memory of Masahiko Aoki Jiahua CHE June 21, 2017 Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 1 / 14 Professor Aoki, Comparative Institutional Analysis, China's Reform, and I Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 2 / 14 with Japan (v.s. U.S.) as a case in point I Opening the black box of (Japanese/American) firm | not as a production function, but as an organization structure I Demonstrating how different ways of organizing firms lead to different product/process specialization I Explaining why firms in different countries (Japan and U.S.) organize differently: Complementarity between organization of firms and organization of societies: Not all market economies the same A Theory of \Institution-Induced" Comparative Advantages Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 3 / 14 I Opening the black box of (Japanese/American) firm | not as a production function, but as an organization structure I Demonstrating how different ways of organizing firms lead to different product/process specialization I Explaining why firms in different countries (Japan and U.S.) organize differently: Complementarity between organization of firms and organization of societies: Not all market economies the same A Theory of \Institution-Induced" Comparative Advantages with Japan (v.s. U.S.) as a case in point Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 3 / 14 I Demonstrating how different ways of organizing firms lead to different product/process specialization I Explaining why firms in different countries (Japan and U.S.) organize differently: Complementarity between organization of firms and organization of societies: Not all market economies the same A Theory of \Institution-Induced" Comparative Advantages with Japan (v.s. U.S.) as a case in point I Opening the black box of (Japanese/American) firm | not as a production function, but as an organization structure Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 3 / 14 I Explaining why firms in different countries (Japan and U.S.) organize differently: Complementarity between organization of firms and organization of societies: Not all market economies the same A Theory of \Institution-Induced" Comparative Advantages with Japan (v.s. U.S.) as a case in point I Opening the black box of (Japanese/American) firm | not as a production function, but as an organization structure I Demonstrating how different ways of organizing firms lead to different product/process specialization Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 3 / 14 Complementarity between organization of firms and organization of societies: Not all market economies the same A Theory of \Institution-Induced" Comparative Advantages with Japan (v.s. U.S.) as a case in point I Opening the black box of (Japanese/American) firm | not as a production function, but as an organization structure I Demonstrating how different ways of organizing firms lead to different product/process specialization I Explaining why firms in different countries (Japan and U.S.) organize differently: Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 3 / 14 A Theory of \Institution-Induced" Comparative Advantages with Japan (v.s. U.S.) as a case in point I Opening the black box of (Japanese/American) firm | not as a production function, but as an organization structure I Demonstrating how different ways of organizing firms lead to different product/process specialization I Explaining why firms in different countries (Japan and U.S.) organize differently: Complementarity between organization of firms and organization of societies: Not all market economies the same Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 3 / 14 I Round tripping I Hong Kong v.s. mainland China I Immigration/migration Limit to home-institution-induced comparative advantages I \Export" home institution? Home-institution-induced comparative advantages I China's twin surplus Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 4 / 14 I Hong Kong v.s. mainland China I Immigration/migration Limit to home-institution-induced comparative advantages I \Export" home institution? Home-institution-induced comparative advantages I China's twin surplus I Round tripping Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 4 / 14 I Immigration/migration Limit to home-institution-induced comparative advantages I \Export" home institution? Home-institution-induced comparative advantages I China's twin surplus I Round tripping I Hong Kong v.s. mainland China Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 4 / 14 Home-institution-induced comparative advantages I China's twin surplus I Round tripping I Hong Kong v.s. mainland China I Immigration/migration Limit to home-institution-induced comparative advantages I \Export" home institution? Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 4 / 14 I Teaching from a Nobel Laureate: three secretes to a successful transition to markets But can institutions be transplanted (exported/imported)? Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 5 / 14 But can institutions be transplanted (exported/imported)? I Teaching from a Nobel Laureate: three secretes to a successful transition to markets Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 5 / 14 Professor Aoki, Comparative Institutional Analysis, China's Reform, and I Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 6 / 14 I Aoki and Greif (Comparative Institutional Analysis): equilibrium rules of game I Different aspects of an institution are there for a reason: to complement other aspects of the institution I Caution to transplate institutions What is institution? I North (New Institutional Economics) : rules of game I Some institutions are good, others are bad I Institutions of different economies categorically classified as good or bad I Either destined to be bad or transplant (\import") good to become good? Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 7 / 14 What is institution? I North (New Institutional Economics) : rules of game I Some institutions are good, others are bad I Institutions of different economies categorically classified as good or bad I Either destined to be bad or transplant (\import") good to become good? I Aoki and Greif (Comparative Institutional Analysis): equilibrium rules of game I Different aspects of an institution are there for a reason: to complement other aspects of the institution I Caution to transplate institutions Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 7 / 14 From institution to institutional change I Aoki (2001): a self-sustained system of shared beliefs about how the game is played I To bridge institution at work and institutional chaos? I Smooth institutional transition I \Public proposition" (Aoki 2011, 2012, 2013, 2014, 2015) I Chaotic institutional transition I Conflicts (Aoki 2015, Aoki, Che, Nakabayashi 2017 in application to the historical comparison of China and Japan) Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 8 / 14 I But how about complementarity? The contrasting experience in transition from central planning to markets I \institution as rules of game": a bit blackbox I To add contents to the existing concept of institution, Aoki (2001) breaks down institution into several domains An analysis of institution is not only to understand why our institution is here, but also to highlight what are the necessary ingredients and constraints for betterment Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 9 / 14 The contrasting experience in transition from central planning to markets I \institution as rules of game": a bit blackbox I To add contents to the existing concept of institution, Aoki (2001) breaks down institution into several domains An analysis of institution is not only to understand why our institution is here, but also to highlight what are the necessary ingredients and constraints for betterment I But how about complementarity? Jiahua CHE Continuing Towards a Comparative Institutional Analysis In Memory of MasahikoJune Aoki 21, 2017 9 / 14 I \institution as rules of game": a bit blackbox I To add contents to the existing concept of institution, Aoki (2001) breaks down institution into several domains An analysis of institution is not only to understand why our institution is here, but also to highlight what are the necessary ingredients and constraints for betterment I But how about complementarity? The contrasting experience in transition from central planning to markets Jiahua CHE Continuing Towards a Comparative Institutional Analysis