Research On Foreign Direct Investment Of China And Technology Progress

Since the 1980s,foreign direct investment (FDI)as the main inform of international capital flow has exerted increasingly important influence on the economic development of receiving countries and has been paid more and more attention to by the researchers of China and foreign countries. The economists of development economics emphasize the function of alleviating the capital shortage of the receiving countries, especially the developing countries, such as the model of "double gap"of Chenery&Strout. But it can't explain why China attracts FDI by using privilege policy and China has large bank deposits. In fact, The large scale inflow of FDI not only alleviated the short supply of capital in the course of economic growth and quickens the steps of modernization , but, more importantly, it raises the level of technology and efficiency. Thus, it increases the total factor productivity (TFP) of the receiving countries and drives its economy to the course of endogenous growth. FDI can generate technology spillover and technical progress and is an important spring of endogenous growth. "Exchange domestic market for technology" has been the strategy of China for attracting FDI for many years. China hopes to propel its technology progress by attracting FDI. This paper researches the effect of technology progress of FDI of China.First, based on the studies of the existing data , this paper constructs a model of endogenous economic growth, makes empirical analyses and tests with econometric methods .It put forwards that FDI propel China's economic growth mainly through technology progress and China's FDI policy should emphasize the technology progress. Then it analyses the correlation between FDI and technology progress from direct effect and indirect effect and makes its comments. Based on it this paper analyses the affecting factors that FDI propels china's technology progress. At last, this paper puts forward the policy suggestions.