The Analysis On Spillover Effect Of Foreign Direct Investment In China

Since the practice of reform and open policy, how to make use of the foreign investment has become an important part of our social economy activity. Foreign investment not only brings us capital currency, but also brings advanced technology, management experience and so on. The effect of foreign investment in China is measured by the spillover effect, by which we adjust our foreign investment policy. How could we encourage the foreign investment to cause spillover effect? How could we avoid the bad side of foreign investment? These are the problems our government and companies facing with. This thesis looks over the situation of foreign investment in China. This paper use Feder two-sector model and 1998-2003 provincial panel data to test FDI technology spillover effect. The result shows that foreign investment promotes native technology by increasing the capital productivity. But in the long-term, foreign investment does not support our economy sustained growth. And there exists different rate of technology spillover effect among different areas. The main reason is the micro and macro environment are different. At the end of the thesis, the writer gives some policy recommendations to improve the spillover effect.This thesis is spread out as follow:First, this paper explains the research object, why to choose it, study methods, study direction and shortage, and relative overview of Literature.Second, this paper analyzes the change of foreign investment strategy in our country, introduce the current situation and tendency of foreign, and comment on the foreign research and development in detail.Third, this paper explains the channel of technology spillover and its influence. The writer uses the mobile phone industry as an example to analyze this kind of influence. Fourth, this paper tests the relationship between FDI and our economy growth. Then, the writer builds a model to test whether technology spillover exists and whether it is based on the native economy condition.Last, this paper gives some policy recommendations to improve the FDI spillover.