Empirical Analysis Of Technology Spillover Effects Of FDI In China

In the trend of globalization, a co-existent and co-developed economy has been wide developed. FDI in the host country is the typical representatives of economic shapes of intergrowth. Among them, the multinational corporation is the main owner and debit of the international capital. Relying on capital, technology and information advantages, it has been becoming an important impetus to the world economy and technology improvement through promoting the economy, technology and culture of the host country. Lots of developing countries hope to promote their economy and deepen their technology progress by attracting foreign direct investment and take use of technology transfer and technology diffusion of the multinational companies.China has kept implementing "exchanging market for technology "strategy since its reform and opening-up. The pace of introducing foreign investment and technology is accelerated greatly. In 2002, China has been the top one in attracting foreign investment. Foreign direct investment could increase the working opportunities, promote technology progress in China. It has been become important motive force of economy growth of our country. With the realization of commitment to WTO, FDI will cause deeper influence to our economy. How could China take better use of FDI to promote the technology progress and economic growth is becoming an important issue. Does FDI promote our economic growth through technology spillover effects? Does technology spillover effects the same among different FDI sources? Do our policies of attracting foreign investment influence spillover effect? What kind of element has effect on the technology spillover of FDI and how could we take better use of the technology spillover effects of FDI? This paper is going to answer the above questions.This paper is divided into 4 chapters. The basic structure is as follows: Before Chapter One. we reviews the past papers that studying the technology spillover effects from FDI with giving their theory and early models first. After that, the empirical research on technology spillover effects of FDI was introduced. This gave a theory foundation for the following researches. Chapter One introduces related concepts of technology spillover effects and explains the channels through which spillover effects could occur. Chapter Two was the most important part of this paper. The different periods of China in attracting foreign direct investment was given first. After that, based on OLS and Granger no-causality test, the technology spillover effects of foreign direct investment was investigated, and a comparative analysis on the technology spillover effects of different sources was also conducted. The research results, which were obtained from the data in the period of 1999 to 2005 of China, show that FDI plays a major role in promoting China's technology advance and economic growth through technology spillover effects. FDI and economic growth were result and cause for each other. The direct investment from HK, Macau and Taiwan has more distinct spillover effects than that from other countries. Government policy also has important influence on technology spillover effects. Chapter Three analyses the factor that could influence technology spillover effects. According to our analysis, we could get that FDI do promote our economic growth through technology spillover effects. In particular, the positive effects of FDI are likely to increase with the level of local capability and competition. Therefore, Chapter Four discussed the policies China should take to promote absorbing of technology spillover effects of FDI.The shortcomings of this paper were that the factors influencing the technology spillover effects were not analyzed through metrology method. Because of difficulties to get data, intra-industry spillover effects were not analyzed either.