Study On The Threshold Mode Of FDI Technology Spillovers:Based On The Absorptive Capability Perspective

Technological progress is the source of long-term economic growth, and it mainly depends on domestic R&D and international technology spillovers, in an open economic system. Since the current R&D capability and technology level are still limited in China, how to take advantage of the international technology spillovers to promote technological progress and economic growth is particularly important. Although FDI has become the main channel of international technology spillovers, but its technology spillovers effect has not been supported by empirical evidence consistently, and its deep-seated reason is that the absorptive capability can affect FDI technology spillovers. At present, most of the studies on the relationship between absorptive capability and FDI technology spillovers are empirical studies, the existing literature is lack of theoretical study. In addition, the different empirical conclusions came out, since the inconsistent cognition of absorptive capability and the emphasizing the single factor, such as technology level, human capital or financial development and so on. Although some scholars have tried to explain the relationship between absorptive capability and FDI spillovers from the view of"threshold effect", but due to the deficiencies of the methodology, the specific mode of"threshold effect"has not been analyzed, and most of these studies remain in a static analysis framework.In view of this, this dissertation focused on the relationship between absorptive capability and FDI technology spillovers, and did in-depth research on the specific mode of the FDI technology spillovers"threshold effect"based on the absorptive capability perspective. The main purposes of the study were: learning the mechanism between the absorptive capability and FDI technology spillovers; evaluating the current policy of attracting foreign investment and absorptive capability of each province; providing empirical evidence for making future policy of attracting foreign investment according to absorptive capability in each province. Main research contents include: firstly, the theoretical study on the relationship between absorptive capability and FDI technology spillovers in developing country was done in order to provide theoretical basis for the later empirical studies; secondly, considering the hierarchy of the macro absorptive capability, opening degree, regional innovation capability and financial development were chosen as the proxy variables of three dimensions of absorptive capability, and the threshold modes of FDI technology spillovers based on each dimension of absorptive capability were analyzed; thirdly, based on the re-definition of absorption capability from the generalized perspective, a index system was constructed in order to measure the generalized absorption capability of each province, and then the time-lag characteristic of FDI technology spillovers was introduced into the empirical model in order to study the dynamic threshold mode of FDI technology spillovers based on generalized absorption capability. Compared with the existing research, the innovative work of this dissertation is mainly reflected in the following aspects:â‘ Focusing on the developing country, a two-stage Cournot oligopoly model was constructed in order to illustrate the fees decisions for gaining or preventing the spillovers effect and the output decisions of domestic-funded and foreign-funded enterprise, and then the theoretical analysis on the general mechanism between absorption capability and FDI technology spillovers was done. The research indicates that: When the absorptive capacity of domestic enterprise belows the threshold value, the equilibrium rate of technology spillovers increases as the absorptive capacity of domestic-funded enterprise increases. At the same time, domestic-funded enterprise is willing to pay more for gaining the technology spillovers, while the foreign-funded enterprise is willing to decrease the pay for preventing the technology spillovers. When the absorptive capacity of domestic enterprise is higher than the threshold value, the change of equilibrium rate of the technology spillovers and the cost of gaining or preventing the technology spillovers can not be determined. The existence of absorptive threshold effect in developing country was demonstrated, the different results of all the empirical researches on the relationship between absorptive capability and FDI technology spillovers was fully explained, and this lays a good theoretical basis for the later empirical study.â‘¡Considering the hierarchy of macro absorptive capability, the inter-province panel data of China during 1985-2007 was used to construct a threshold model, in order to analyze the threshold effect of FDI technology spillovers from opening degree, regional innovation capability and financial development perspective, respectively. And then the empirical test of threshold effect, the calculation of the true threshold value and the analysis of specific threshold mode were done. The empirical results indicate that the FDI technology spillovers has the significant"dual-threshold effect"based on opening degree, regional innovation capability and financial development in China. However, the mode of each threshold effect is different; the threshold mode based on the opening degree looks like"inverted U"type, the threshold modes based on the regional innovation capability and the financial development are both"three gradient"type. The extended analysis shows: At present, the FDI technology spillovers are significant in most provinces, but the FDI technology spillovers in these provinces are absorbed insufficiently.â‘¢Considering the cooperativity of each dimension of absorptive capability, a re-definition of absorption capability based on the generalized perspective was done, a index system was constructed in order to measure the time-varying trends and regional differences of generalized absorption capability in each province. On this basis, the time-lag characteristic of FDI technology spillovers was introduced into the empirical model, and the dynamic threshold regression technology was used to analyze the relationship between generalized absorptive capability and current technology spillovers of FDI, the in-depth analysis of dynamic threshold mode based on generalized absorptive capability was done. The measurement of generalized absorptive capability shows: During 1985-2007, generalized absorptive capability of each province increases with a low speed; the eastern coastal provinces almost got a higher absorptive capability, while the western provinces got a lower absorptive capability. The GMM estimation result of dynamic threshold model verifies the existence of time-lag characteristic of FDI technology spillovers, and it shows that: After considering the time-lag characteristic of FDI technology spillovers, the current technology spillovers of FDI has significant"tri-threshold effect", the mode of it is the"four gradient"type. By the end of 2007, since the generalized absorptive capability in each province has not been cross the max threshold value, the current technology spillovers of FDI became significant but did not reach the highest value, and it indicates that the absorption of current technology spillovers of FDI has some room for improvement.