Study On FDI Technological Spillover Effect

New Economic Growth Theory indicates that technological advance has become the key factor which influences one nation's economic growth in the long run and many empirical studies and all countries' development has also proved it to be. Generally speaking, technological advance originates from independence innovation and introducing, imitating and learning from outside. Some relevant studies point out the technological advance of one nation is the result of foreign technology transfer and diffusion, not R&D at home. With the development of economic globalization, FDI is playing a more and more important role in improving economic growth and technological advance in LDCs. Since the reform and opening, with investment environment improved, China has got tremendous achievements in attracting FDI. From 2003, China has got a historical break in FDI scales and jumped to Number one in the world the first time. Through about 30 years' development, the objective that to use foreign capital makes up domestic capital inadequacy has been realized. Presently, the main purpose of attracting FDI in China is transferred to be promoting domestic technological advance by making use of the advanced technology brought in by FDI.The paper confirms the connotation of technological spillover and reviews its characteristics and mechanism, based on foreign direct investment theory. And then makes Zhujiang River Delta and Yangtse River Delta the study object, makes empirical analysis on FDI technological spillover and respectively calculates FDI technological spillover. The paper also makes empirical analysis on the factors affecting FDI technological spillover from the host country's perspective and theanalysis results indicate that the factors are different in the two deltas. At last, based on the analysis above, respectively put forward some suggestions and strategies about how to induce FDI technological spillover effectively.