An Empirical Study On The Knowledge Spillovers And Imbalanced Distribution Of FDI In China

China has achieved great success in using the foreign direct investment (FDI) after three decades of reform and openness. As been expanding in scale and becoming more diverse, FDI becomes an important source of capital accumulation in China, and has made great contribution for China’s rapid economic growth. Meantime, the regional imbalance of FDI in China has become increasingly prominent gradually. FDI is major concentrated on the eastern coastal areas, while rather small in the central and western areas. The imbalance distribution of the FDI in China has becoming the potential obstacle of coordinated development of all regions in China. Therefore, at present, how to promote the reasonable distribution of newly FDI in China, and ease the regional imbalance of FDI, is the primary objective of adjustment of China’s utilization policy of FDI.The competition was quite fierce in attracting more FDI inflows, among the different provinces in China. Each province gave FDI many different preferential policies in tax reduction, market openness, infrastructure convenience and so on. Up to now, the preferential measures based on the traditional factors of local choice have been gradual convergence, and the incentive effects on new FDI have been also declining in China’s regions. Moreover, under the framework of China’s gradient openness police, the traditional advantages of eastern regions are clearly unmatched in central and western regions. If China’s FDI utilization policy is still focus on the traditional local factors of FDI, the effect will be limited and the imbalance distribution of FDI will worsen. Therefore, under the present framework, in order to change the pattern of FDI’s non-equilibrium distribution gradually, it is urgent to find and confirm the new local factor that attracts FDI, and take it as basis of China’s FDI utilization policy.In the knowledge economy, as the core competitiveness, knowledge has infiltrated in all aspects of production and operation, and creates lasting competitive advantage. More and more FDI takes gaining knowledge of the host country as the main objective. The knowledge spillovers, which are formed with the production of knowledge, as being conductive to knowledge diffusion and absorption, become the important newly local factor of FDI.Based on the interaction between knowledge spillovers and FDI, the dissertation discusses the attractive effects of knowledge spillover on FDI from the theoretical and empirical levels, and explores how to adjust the regional knowledge spillovers in order to achieve the policy objective of the reasonable distribution of FDI. The dissertation is structured as follows:the first chapter introduces the significance, ideas and methods of the dissertation, and reviews the theory of FDI’s location choice; the second chapter analysis the content, features, mechanisms of knowledge spillover, and measures each province’s knowledge spillover level by using the Bayesian spatial model; the third chapter reviews the development of FDI in China, empirically measures the imbalance level of FDI, and evaluates the effect of the imbalance distribution of FDI on China’s economic growth; the forth chapter discusses the theoretical relationship between FDI and knowledge spillover, and analysis the direct and indirect effects of knowledge spillovers on FDI; the fifth chapter empirically tests this two effects by the simultaneous equations model; the sixth chapter tests the role of different distribution patterns of knowledge spillovers on the imbalance distribution of FDI through numerical simulation and nonlinear optimization models, and according the result, proposes the appropriate institution arrangements and policy measures for the rational flow of knowledge spillovers among regions, so as to create fine environment to promote the reasonable regional distribution of FDI.Based on the analysis above, the main conclusions are as follows:1. FDI has significantly promoted China’s economic growth, and the non-equilibrium distribution of FDI has significant negative effect on China’s economic growth. Thus, it is necessary to take measures to reduce the level of FDI non-equilibrium distribution.2. Knowledge spillovers have an impact on local choice of FDI through direct and indirect effects. As the direct effect, knowledge spillovers can increase regional knowledge stock through various ways, making the region more attractive to FDI. As the indirect effect, knowledge spillovers can enhance the local attraction of FDI indirectly by the direct linkage with the innovation ability and the technical efficiency.3. Based on the numerical simulation results, the equalization of the net knowledge spillovers outflow is not conducive to balance distribution of FDI, while the equalization of the net knowledge spillovers inflow can improve the imbalance state of FDI. Based on the optimization model, the dissertation shows in order to maximize the improvement of regional imbalance distribution of FDI, it is necessary to increase the net knowledge spillovers outflows in 14 provinces such as Beijing, i.e., to enhance their contribution of knowledge production on the surrounding areas; meantime, increase the net knowledge spillovers inflows in 15 provinces such as Heilongjiang, i.e., to enhance the surrounding areas’ contribution of knowledge production on these provinces.The policy implications of this dissertation are as follows:(1) we should ensure the net knowledge spillover outflow at a reasonable level through taking intellectual property rights and preferential measure; (2) we should enhance the net knowledge spillover inflow and ensure the reasonable absorption and flow of knowledge spillovers through promoting the cooperation among production, research and learning, constructing the network of industrial relations and human relations; (3) we should create an system platform for the reasonable flow of knowledge spillovers through promoting a national innovation system. The implementation of these measures can promote the rational flow of knowledge spillover, thus effectively promoting the equilibrium distribution of FDI in China.