Foreign Direct Investment, Linkage Effect And Technology Spillover

In recent years, the number of foreign direct investment in Jiangsu Province is rapidly growing year after year. The scale is ranked ahead among the provinces of China. FDI not only brings the capital that we need, but also introduces advanced technology. After absorbing such a large number of FDI, it's becoming more and more important that whether FDI has positive effect on the technology progress of the domestic companies.In this paper, first it introduces the theoretical framework about the technology spillover effect of FDI through the linkages between domestic companies and foreign companies; second describes the basic conditions of Jiangsu Province's use of FDI in these years, third constructs the econometrical model according to the reality of Jiangsu Province and theoretical analysis, concludes some research results and makes some recommendations in the end.The variables that are used in the model are the data classified by industries of Jiangsu Province, which can accurately reflect the real level of Jiangsu Province. The conclusions through the econometrical analysis are as follows:FDI has a positive effect on the domestic technology progress; backward linkage effect is most significant of three linkages; the larger the technology gap, the lower the technology spillover effect of the backward linkage; the higher the degree of export-oriented of sectors, the higher the technology spillover effect of backward linkage.According to the theoretical analysis and econometrical results, we take some suggestions to advocate the better absorbing of technology spillover:strengthen the relationship between FDI and local companies; promote technical progress of local companies; restructure the industrial and trade structure; establish fair and effective economic environment.