The Empirical Analysis Of The Relationship Between Absorptive Capacity And FDI Spillover In China

It is nowadays generally accepted that inward foreign direct investment (FDI) by multinational enterprises is a major channel for the access to advanced technologies by developing countries .The great of FDI is a potent instrument of developing in China .The core object that China tries its best to attract foreign capital is to get more advanced technology .International technology diffusion is the subject of many empirical studies .Many studies indicates that FDI has potential of technology spillover, but such process does not fulfill itself automatically ,which means how to improve the absorptive capacity of technology spillover to China is the key problem that must be overcome .In this paper, absorptive capacity is deemed to be the crucial factor to achieve international technology spillover. Based on the definition of absorptive capacity ,the author sets up a framework to analyze how absorptive capacity affects technology spillover in China .Utilizing the aggregate samples of China, the paper makes a specific study in the impact of absorptive capacity on technology spillover from FDI in China.Based on the empirical framework, this paper gets the results following : (1)Research shows that absorptive capacity affects technology spillover indeed. Lack of advanced absorptive capacity, FDI could not fulfill the spillovers with the interaction with absorptive capacity in China at present. (2)As one of the most important elements of absorptive capacity , human capital enhances the result of technology spillover in China. That is to say that present human capital could absorb technology spillover of FDI well in China. (3)Absorptive capacity is a complex system including human capital, financial market efficiency, economic openness and so on. This paper indicates that the investment of research in China affects technology spillover of FDI mostly.Based on the empirical research , the author puts forward some suggestion: (1)The policies of introducing FDI should lay importance on the effects of technology spillover of FDI.(2)Upgrading the aggregate level of human capital in China according to education.(3)China government should continue increasing the investment of research.(4)Improving the level of financial market efficiencies and economic openness.