Governing inter-jurisdictional capital mobility: the role of regional cooperation in shaping firms’ cross-border investment

Abstract This study develops a new analytical framework for understanding how regional cooperation shapes cross-jurisdictional capital mobility. Using an original dataset that links news-based records of cooperative activities with firm-level evidence on non-local subsidiary establishments in China’s Yangtze River Delta (YRD) from 2010 to 2021, we show that regional cooperation plays a pivotal role in facilitating capital flows across administrative boundaries. The analysis identifies three governance mechanisms: reducing information asymmetries that heighten opportunity recognition, lowering institutional transaction costs rooted in bureaucratic fragmentation, and enabling knowledge spillovers that prompt innovation-driven capital reallocation. Socio-political cooperation—anchored in social capital and administrative coordination—exerts stronger influence on capital mobility than market-oriented initiatives, and formal agreements consistently outperform informal arrangements. By highlighting such differentiated effects, the study makes three contributions. It advances theories of capital mobility by placing regional cooperation at their core; it enriches regional integration scholarship through a comparative institutional perspective; and it offers policy-relevant insights for designing context-sensitive cooperative models to address spatial economic inequality. Overall, the findings illuminate how collaborative governance can reshape regional development trajectories within and beyond the Chinese context.