On The Spillover Effects Of Foreign Direct Investment

Economic globalization makes the countries all over the world influenced by FDI spillover effect, especially for developing countries. The FDI spillover effect mainly reveals that the foreign direct investment constitution will affect the area future and the economical development tendency .Since the reform and open policy, Jiangsu province has attracted a large amount of foreign direct investment. Therefore, analyzing Jiangsu province who is a representative area and to find out some laws how FDI spillover effect comes out, can provide with some representative regional evidences to the issue and to take out some appropriate polices to promote the spillover effect.In this paper, study found that Jiangsu province absorbing FDI shows new features since 1985. Some new characteristics have appeared in source place, investment way and the foreign capitals constitution of Jiangsu Province at present; in terms of constitution of source place, take Foreign-funded enterprises as the core in the source place of the foreign capitals; As for the regional coverage, the southland has attracted more FDI than the northern region; In terms of utilizing way, the individual proprietorship trend of FDI is being strengthened constantly;According to industry, take investment of the manufacturing industry as the core. These changes seem to be not at all relevant to its inherent connection and certainty. from the point of view of host country, we should care even more this kind of change especially overflow on the influence of the effect to FDI technology, therefore we can take corresponding countermeasure and measure according to its favorable or adverse effect of emerging.In this paper, we analyze the FDI spillover effect in Jiangsu province from the urban aspect, regression results show that: To improve the level of human capital and increase the scientific and technological input have a positive effect on FDI technology spillovers, while a higher level of market opening inhibited this effect, which makes us began to reflect the adverse effects due to over-exploitation. As for the industrial data, we analyze the FDI spillover effect both from intra-industry and inter-industry. The results show that the industrial sector generated by various sectors within the technology industry spillover effect is not significant, even appeared crowding-out effect, which may be due to the low correlation between domestic and foreign enterprises. On the other hand, the FDI spillover effects between industries is very significant, and both forward and backward spillover effects are more evident.Moreover, the essay goes on with a case study of industry, we research the FDI technology spillover effect in Yap. From the perspective of the actual development of the company, we find that human capital and the scientific and technological input are significant for the occurrence of FDI spillover effect.Based on the analysis above, finally the thesis puts forwards with some policy recommendations of how to exploit the spillover effect and improve the technology development in nowadays open economy.