The Empirical Analysis Of Inter-industry Spillovers From Foreign Direct Investment In Manufacturing Sector Of China

In the process of globalization predominant by multinational corporations, foreign direct investment is playing an increasingly important role. Its impact on economic and social development of host country, especially developing countries are also enlarging. Apart from to increase the host country's capital stock and to alleviate the host country's employment pressure, the long-term and fundamental impact of large amount FDI on host country is the technology spillover effect. Technology spillover effect from FDI is a major channel for the developing countries to absorb the international advanced technology.The past research about technology spillover effect from FDI was mainly focused on intra-industry. However, the latest theoretical and empirical studies have shown that inter-industry spillovers from FDI is more significant than intra-insudstry spillovers. Therefore, this paper focuses on the study of inter-industry spillovers from FDI. Firstly, this paper detailed analyzed the mechanism of inter-industry spillovers from FDI, including the characteristics, spillover channels, influencing factors and technology spillover mechanism of inter-industry spillovers. Based on this, the author selects 15 manufacturing industries's panel data of China from 1999 to 2006 years; using panel data model empirical analyzed the inter-industry spillovers from FDI in manufacturing industry of China.Based on the F-test, LM test and Hausman test of three regression model, the thesis confirms the individual fixed effect model is the optimal econometric model. After empirical analysis of the model, it leads to the conclusions: 1) The domestic enterprises of China's manufacturing industry acquire notable intra-industry and inter-industry spillovers from foreign direct investment. 2) Inter-industry spillovers is more obvious than intra-industry spillovers, it indicates that the technology spillover effect from FDI occurred mainly between sectors; 3) In inter-industry spillovers, backward linkage spillovers is more significant than forward linkage spillovers, it demonstrates that multinational corporations via purchase raw materials and intermediate products from domestic enterprises in upstream industries enhance their productivity. Compared to backward linkage spillovers, the domestic enterprises in downstream industries have less relation with multinational corporations, thus, the forward linkage spillovers they acquired is smaller.On the basis of empirical research, In order to strengthen the linkage between domestic enterprises and multinational corporations to promote inter-industry spillovers from FDI to domestic enterprise, the thesis makes the following suggestions: 1) Promote technology upgrading of domestic enterprises; 2) Strengthen the linkages between industries, make full use of the forward and backward linkage between domestic enterprises and multinational corporations. 3) Actively develop Supporting enterprise, form industrial clusters; 4) To provide financial support to domestic enterprises.