A Study On Reverse Technology Spillovers Of China’s OFDI

Reverse technology spillovers (RTS) are associated with foreign direct investment. For developing countries, the keywords such as technology, efficiency, structure upgrading and the transformation of economic development mode is of great significance at this moment. China’s foreign direct investment (OUTWARD FOREIGN DIRECT INVESTMENTS, referred to OFDI) starts late, but develops rapidly, which gives the stock of the foundation to absorbe the RTS to promot effect industrial transformation, upgrade economic structure and improve the efficiency of whole economy. Due to this, the RTS’effect of OFDI becomes hot spot of theoretical and empirical study. And this issue attracts many researchers’attention. They do the study from different perspectives. For this reason, the research fruits are emerging in an endless stream. This paper systematically reviews the results of these studies.This paper studies the issue of reverse spillovers by follow derections. Firstly, this paper tries to find the usual path of RTS. The path begins from the host country of OFDI. To be specific, the RTS is originated in the multinational subsidiaries’ area where is full of host country’s knowledge technical externalities. To be exact, the real body of RTS is technological externality, which will only affect a certain space. OFDI helps the developing countries ententerprises come across borders for useful technological externaliteis. It should be said that OFDI helps the technology-searching enterprises to overcome the space limitation and touch the technical externalities. Besides, the OFDI enterprises have the chances to obtain technical externalities or say RTS. If OFDI enterprises want to absorb RTS successfully, they have to make full use of the links between subsidiaries and themselves. The internal links play very important roles in the progress, which draw away RTS from host countries to their parent companies. When the parent companies have successful acquisition of technology externalities, the word "reverse" in RTS is implemented. And the RTS is completed. After this, the parent company tries to digest and absorb the RTS to make the product invention. Finally, the product with RTS will fulfill the market demand. The market will give RTS mechanism with positive feedback and get profit incentive. In fact, the application value of the RTS is the higheststandard to evaluate its quality.This paper focuses on the RTS of China’s OFDI. This paper tries to figure out how companies make decisions to launch OFDI for RTS. This paper simulates the company’s decisive situation and finds the reansonal explanation.then it’s reasonable for companies to enter the technology cluster area finding RTS chances. After that, the paper discusses RTS occurring mechnism in the host country. It tries to emphasize the important role of the human capital market. Then this paper discusses the simulation’s conditions of RTS and the result mode of RTS...by using a three stage game model. After that, this paper uses stochastic frontier model of panel data to do empirical study of Chinese absorption factors about RTS. The effect and influence factors, such as absorptive capacity, the degree of economic openness, financial deepening level, have been proved that have different impacts on the RTS. It concludes that strengthening spillover absorptive capacity, increasing the openness of the economy and heighting the financial deepening level is conducive for the RTS’absorption. Meanwhile, China’s RTS absorption presents regional imbalance, which means that eastern developed areas of China have better absorption effect, and the other areas have poor one. As the accumulation of RTS’absorbing practice, the RTS effect has been demonstrated in the eastern region. It shows the future trends that along with the rising of OFDI scale; The RTS’effect such as efficiency enhancing will become more and more obvious.In order to absorb the RTS better, this paper discusses the path of enterprise absorbing RTS and related strategies. The enterprises should launch OFDI prioritily in developed countries with high level of innovation. Parent company should encourage the subsidiary to feedback the RTS. Most importantly, they should encourage R&D researchers code RTS, and give more technical support. The parent company should establish the mechanism of absorption, digestion and integration based on its innovation platform, learning ability, absorptive capacity, digestive ability and application ability of product development. The parent company should enhance the capability of supply chain management, strengthen the integration of upstream and downstream, and upgrade the whole industry to enhance the international competitiveness of products. At the same time, the acquiring profits can be put into encouraging the contributors of RTS.In order to encourage enterprises to absorb the RTS furtherly, governments need to establish bilateral or multilateral investment framework with the developed countries and establish the system of foreign direct investment performance evaluation. Government should try to explore the system mode to upgrade economic structure and improve efficiency in a RTS thinking ways. In future, for better absorbing RTS, government needs to fix the low management efficiency problems to help enterprises to catch the transient overflow opportunities overseas. Government and enterprises should face the host country’s OFDI barriers and overly strict control measures together. The enterprise and the government OFDI inconsistent goals problem also need to pay attettions. At last, this paper gives the conclusion of the study, research insufficiency and the further research prospect.