ABSTRACT
This chapter examines whether transnational or social capital best explains the performance of entrepreneurs in China. International forces have been playing a more important role in China's economic development; therefore, people with transnational capital should do well, relative to those who have not been abroad. An important aspect of transnational capital is the quality of the imported technology a product or firm possesses. Local entrepreneurs, as expected, depend far more on social relations than on the technology in their product. An entrepreneur's ties to the local government are a good indicator of social capital because successful entrepreneurs work closely with the government. Social capital, in the form of membership in the Chinese communist party (CCP), is very important to the success of our entrepreneurs. Social capital, in the form of membership in the CCP, has been among the best predictors of household income and upward mobility in Maoist and post-Maoist China.
