Analysis On FDI Spillover Effect Based On Absorptive Capacity Of China

In order to conform to economic globalization trend, China is melting into world economic system through international division of labor and world market, the total size of foreign direct investment in China has being further expanded, FDI has become more and more important to China's economy. The new Income Tax Law has marked FDI's Treatment of non-nationals on tax policy will be phased out by gradually, it is the trend of the times, but the quantity and size of FDI will probably be influenced. So how to utilize and attract FDI more effective, promote FDI make more contributions to China's economy has become the thing need to be considered first when formulating foreign policy to create macroeconomic environment. This article mainly analyzed the effect mechanism of spillover effect and absorptive capacity and influencing factors from the aspect of the host country's own absorptive capacity, consider absorptive capacity as the key factor which decide the size of the spillover effect. Also analyzed the status of the FDI and absorptive capacity of our country. Then according the spillover effect model of Borensztein et al which based on endogenous economic growth model, the author build empirical model analyzing China's spillover effect based on absorptive capacity, analyzed the total sample and sub-regional samples, the result showed FDI do affect our country's economy combine with human capital and R&D investment. So the absorptive capacity combined to human capital and absorptive capacity combined to R&D investment of China are particularly important for our country to abtain the spillover effect. Our country's absorptive capacity is not very obviously in overall, apart from the relatively mature eastern coastal areas, the absorptive capacity of broad inland areas are relatively low, so greatly limited the play of the spillovers. Finally this article put forward related policy recommendations about our country how to improve the absorptive capacity and increased spillover effect.