The Impact Of Human Capital On Technology Transfer From FDI In China

It is nowadays generally accepted that inward foreign direct investment (FDI) by multinational enterprises (MNEs) is a major channel for the access to advanced technologies by developing countries. The great amount of FDI is a potent instrument of development in China. The core object that China tries its best to attract foreign capital is to get more advanced technology. International technology diffusion is the subject of many empirical studies. Many studies evidence that FDI has potential of technology diffusion, but such process does not fulfill itself automatically, which means how to improve the absorptive capacity of MNEs ' technology transfer to China is the key problem that must be overcome. In this paper, human capital is deemed to be the crucial factor to achieve international technology transfer. Based on the definition of technology transfer, the author sets up a framework to analyze how human capital affects technology transfer in China: "Technology input model "and "Technology spillovers model". Utilizing the aggregate samples, regional samples, industrial samples and case study, the paper makes a specific study in the impact of human capital on technology transfer from FDI in China.Based on the empirical framework, this paper gets the results following: (1)Research shows that human capital affects technology transfer indeed. "Technology input model" shows that the significant input of R&D by MNEs is induced by human capital in China. On the other hand, "spillovers model "demonstrates human capital does not boost the spillovers as a whole. Because of lack of advanced human capital, FDI could not fulfill the spillovers with the interaction with human capital in China at present. (2)Human capital of senior high school level promotes technology input from FDI while junior high school level influences technology spillovers mostly. When the paper tests the subject in different regions of China, the results show that junior high school level human capital brings significant spillovers in eastern region, while spillovers in mid and western region are achieved by interaction with primary school level labor force .The reason is that FDIin eastern region is more capital-, knowledge- and skill-intensive. Then spillovers take place by interaction with higher human capital. As for technology input, the significant effect is caused by senior high school level in eastern region while junior high school level in mid and western region. (3)The case study of Guangdong province has got the same result as the foregoing research. It deserves to be emphasized that the spillovers through labor turnover did not fulfill successfully, which indicates that an effective mechanism should be set up to attract talents.Human capital is deemed to be the most important element to break through "threshold level" in this paper. Based on the empirical research, the author puts forward some suggestion: (l)increase education expenditure;(2) attract more capital and skill-intensive FDI;(3) promote MNEs to carry on training;(4) set up a more effective mechanism to attract talents from MNEs;(5) attract talents abroad to work in mainland.