Study On The Absorptive Capacity Of Technological Spillover Effect Of FDI In China-An Industry View

Since Reform and Opening up, along with the improvement of the investment environment , China has gotten resplendent achievements in attracting foreign investment. The principal object of China's effort on attracting Foreign Direct Investment (FDI) is to get benefit in technology progress, availing the technological spillover effect of FDI in China. However, according to the researches at present, the technological spillover effect of FDI is not spontaneous, but affected on certain factors such as the absorptive capacity of the host country. Therefore, it has great theoretic value and practical meaning to probe into the issues of the absorptive capacity of industries on the technological spillover effect of FDI in China.Considering the fact that the researches on the absorptive capacity of technological spillover effect of FDI in China mainly focused on the macro-aspect (country) issues, rarely covered the middle-layer (industry) and micro-aspect (enterprise) ones, this paper discussed the issues of the absorptive capacity of technological spillover effect of FDI at the viewpoint of industry. Since the industries are the crucial classes of business for FDI in China all the time, the discussions in this paper are based on the sample data of 20 industries.Firstly, this paper redefined the concept of absorptive capacity, distinguishing the absorptive capacity on the technological spillover effect of FDI, the absorptive capacity on FDI and the absorptive capacity on technology. Secondly, this paper comprehensively evaluated the absorptive capacity of industries on the technological spillover effect of FDI, reconstructed the evaluation index system on the absorptive capacity of industries on the technological spillover effect of FDI by combining the 4 channels of the technological spillover of FDI. The evaluation index system, which will covered the variables directly related to the absorptive capacity on the technological spillover effect of FDI in an industry, is comprised of 5 indexes, including the competition between the domestic and foreign enterprises, R&D expenditure , technology gap , industrial relevance and human capital stock. Moreover, this paper assigned weights to the indexes respecting to the magnitudes of their influence to the technological spillover effect of FDI. Based on the analysis above, this paper has also testified the relation between the absorptive capacity of industries and the technological spillover effect of FDI using econometric approach.The research of this paper indicates that there are evident gapes among the main industries on the whole levels of absorptive capacity of on the technological spillover effect of FDI in China, with different absorptive capacity among the main industries in the 4 channels. Based on these conclusions, this paper gave corresponding suggestions on policy development of the host country, in order to enhance the absorptive capacity of the main industries.