Study On Absorptive Capacity And Technology Spillovers From FDI

Today in economic globalization, multinational corporation relying on its own capital,technology and information advantage, promotes the economy, technology and culture of the host country, and becomes important strength of influencing technology progress and development of the world day by day. Our country has been since reform and opening-up, keep implementing"market for technology"strategy, the paces of introducing the foreign finance and technology are accelerated greatly, has already become one of the countries which absorbed foreign capitals most in the world. Practice has shown, however, when multinational corporation access to a huge market share and even monopoles some industries in china,our won innovation capability has made slow progress.Why are the technology spillovers from FDI in developing countries not obvious? What are the factors affecting spillover effect? To answer these two questions, the paper studies the relationship between spillover effects and absorptive capacity of host countries.Paper first establishs base model of FDI technology spillover, empirical results shows that there are technology spillovers from FDI. Then by using a panel data set for 21 countries and regions over the 1990-2003 period, paper establishs another model of FDI technology spillovers based on the absorptive capacity of host-counrry, the results showed : 1) The spillovers from FDI are conditional. Only the host country with a certain technical level can effectively absorbs the advanced technology from developed countries. Economical opening did provide opportunities for developing country to learn advanced technology from other countries, but developing countries' own absorptive capacity had decided whether it finally could benefit from FDI through imitating and absorpting. 2) However, if the technology level of host country beyond some critical level, the effect of technology spillovers starts to decline, which indicates that there is a non-linear relationship between absorptive capacity and the efficiency of spillovers from FDI.By using a panel data set for 28 provinces and cities of China over the 1990-2004 period,paper sets up a dynamic model and tests the causality relationship between FDI and economic growth in China.The result indicates that, there is a long-tern stable relationship between the FDI and the economic growth in China,and the absorptice capacity is an important factor influencing the spillovers from FDI. Finally,the paper gaves some corresponding policy recommendations based on the empirical analysis.