The Impacts Of The International Technological Diffusion On The Regional Technological Progress In China

In an open economy, the technological progress of a nation is not only determined by the domestic R&D input, but also by all the channels of R&D in foreign countries. Import trade and FDI and two decisive channels for introducing foreign advanced technology. After the reform and opening-up to the outside world policy, great developments have been witnessed in China in the import trade, imported FDI, and foreign patent application. However, when it comes to the specific situations of the three regions, namely, the East region, the Middle region, and the West region, dramatic differences occur. The imbalance characteristic is a reflection of the real situation of the regional economic development of China. Therefore, there must be differences in the spillover effects of the FDI and import trade.The paper introduces the technological diffusion and the spillover effect theory and elaborates the current situation of the regional technological progress in the three regions of China. A CH trade spillover model with the LP method was established to analyze the contribution of the import trade and FDI to the TFP. The paper uses the panel data of the 29 provinces (autonomous region or municipality) from 1985 to 2005 as well as the panel data of the G7 countries. After an empirical analysis, the paper distinguishes the impacts of the two channels, import trade and FDI, on the three regions of China and compares the single region vertically and the three regions horizontally.Regression results show that both the independent R&D input and foreign technological spillover have remarkable positive impacts on the increase of the TFP, in which the independent R&D input being dominant in enhancing the TFP. This shows that the independent R&D is the decisive factor of the technological progress of China. Specifically speaking, due to the earlier opening-up policy, the East region of China has a relatively small spillover effects of import trade since the technological level, managerial expertise, and innovation in the region already high. Meanwhile, a notable spillover effect occurs since the imported FDI is concentrated in the East region.For the Middle region, the spillover effects of FDI are bigger than the import trade. For the west region which have a relatively weak technological innovation capacity, Because of attracting a little FDI and there still exists a FDI threshold effect in the West region. All of these restrict the local enterprises to absorb foreign technology. There is even no spillover effect in the West region from the FDI.Inferring from the empirical analysis, the paper proposes the policy recommendations to enhance the technological progress and economic development. According to accelerating the speed of the technological diffusion, developing education, accumulating the human capital, and increasing the R&D input, it is just a problem of time for China to enhance the independent R&D.