The institutional-led production networks imply that trade and investment policies encourage inbound FDI for the purpose of import-substitution, export-promotion, and the elimination of domestic gaps in the value chain of production. The PRC has also promoted out-bound FDI by creating overseas clusters of production aimed at using the PRC’s technology and vast accumulated international reserves. International production networks in East Asia are the result of the 1985 Plaza Accord, which triggered the appreciation of Japanese yen and a rise in Japanese production and labor costs. Consequently, Japanese MNEs sought to establish production bases in countries such as Malaysia, Singapore, and Thailand. The 1997 Asian financial crisis also spurred United States (US) and European MNEs to establish production bases in East Asia as asset prices in the region had dropped sharply.