The Analysis About Mechanism On Spillover Effect Of Service FDI

Under the background of service economy, the structure of global foreign direct investment appears a profound change, FDI gradually shifts from manufacturing to service industry, service sector has become the first big industry in attracting foreign direct investment more than manufacturing industry. Since the endogenous economic growth theory, the source of technological progress become one of the major topics that economists pay close attention to, actually FDI is regarded as a significant channel for developing country to obtain positive technology spillover and promote technological progress. The competition effect, demonstration effects, training of local employee effect and linkage effect are considered to be the main channels for realization of FDI positive spillover effect in host country. Along with the expansion of services FDI and structural change in the FDI, more and more scholars focus on the location of service FDI and its influence on economic development for host countries. This article is based on FDI structure change background, considering the heterogeneity of services and manufacturing, we analyze the spillover effect of service FDI and the spillover mechanism combined with theory of service trade, industry economics and new economic geography. The main research includes the following parts:Firstly, we expand a trade in services model, reveal the mechanism of services FDI spillover effect. The model indicates that when service products considered as the intermediate inputs of manufacturing final products, FDI in service industry can increase product variety, enlarge the production scale, promote technical progress and improve degree of specialization in host country, so as to realize the growth of productivity. In this paper, according to conclusions of the model and the analysis of the existing literature, the service industry FDI spillover mechanism is decomposed into three ones, they include R&D spillover effects, inter-industry spillover effects and agglomeration effects. Then, we analyze the three mechanism specifically based on different model, first of all, we analyze R&D spillover effect of FDI in service industry through the expansion of production division theory model. In addition, we investigate inter-industry spillover effect of service FDI through the expansion of Baumol's non-equilibrium growth model, it concludes that service FDI will influence manufacturing productivity and service productivity, which affects the overall productivity improvements. After that, based on the H-O model and the new economic geography theory, we study the agglomeration effect, degree of service trade liberalization is the key factor that impact agglomeration of local enterprises and realize positive externality of agglomeration.Secondly, based on the above theoretical analysis, this paper empirically estimates the existence of services FDI spillover effect, the results shows that the spillover effect of service is significant, which mainly present in promoting technology efficiency. The empirical results in industry level show that financial services FDI has significant spillover effect while non-financial services has not. After that we analyzed the "threshold" characteristics of service FDI spillover effect by Hansen's threshold regression model,we conclude that physical capital,R&D spending in host countries exist single threshold effect the influence of FDI spillover effect, however industrial structure and urbanization level exist significant double threshold effect. These conclusions will provide evidence for the host country as well as China a way to realize positive spillover of service FDI.Thirdly, this article empirically analyzes services FDI spillover mechanisms. First of all, the empirical test on R&D spillover effect of service FDI demonstrates that the foreign R&D spillover effect of SFDI in host country is significant; but the developed countries and developing countries have present heterogeneity on this mechanism, specifically developed countries'spillover effect through R&D spillover is significantly higher than the overall sample while developing countries'R&D spillover effect is not significant. In addition, human capital and institutional factors in host country can promote R&D spillover of FDI in service industry, but financial development level will block this spillover channel. In addition, we inspect industrial linkage effect of services FDI by Chinese provincial panel data, the results show that the promotion effect of service FDI on productivity growth mainly reflects in inter-industry spillover, which embodies on the productivity of manufacturing, this result explains that why foreign capital flows into service sector at disadvantage of productivity growth will not inhibit technological progress, but promote the ascension productivity; Then,we analyze inter-industry spillover effect of services FDI on the threshold effect method, the results show that human capital level, industrial structure and the level of opening to the outside world in China all have double threshold effect on inter-industry spillover of services FDI. The last but not the least, industry panel data regression results show that service FDI will promote service agglomeration significantly, and producer services FDI can promote their respective industries more significant higher than the whole. But consumer services FDI doesn't have significant effect on agglomeration. Quantile regression results show that with the improvement of quantile, regression coefficient of service FDI change from negative to positive, and gradually improve, that means the inflow of service foreign direct investment enterprises is more advantageous to the high agglomeration degree of service industry, while the effects on industry with medium and low agglomeration degree are not significant. After that urban panel data test results indicate that the service FDI can strengthen the positive effect of service agglomeration on service productivities.