| Foreign direct investment (FDI) has developed rapidly since 1980's in our country. The great inflow of FDI not only alleviates the short supply of capital in the course of economy growth, but also accelerates the steps of internationalization. Moreover, the technology improvement effects of FDI raise the level of domestic technology and efficiency. Thus, it increases the total factor productivity of domestic countries, driving the economy to the course of endogenous growth. The technology improvement effects of FDI can be divided into direct technology effects and indirect technology spillovers. Comparing the two effects between our regions may help to find the differences and it means a lot for the local competition, working efficiency and the improvement of technology.This paper expands the conventional R&D Model, concluding that the FDI plays a positive role in the domestic level of technology based on the balanced growth path. Furthermore, it gives the mathematical expressions of the direct and indirect technology effects. To explain the cause of technology improvement effect of FDI, this paper introduces the spillovers effects of technology diffusion based on the spatial analysis in Physics. According to the two theories above, this paper constructs a model with the possible factors towards the domestic technology improvement. By making empirical analyses with econometric methods towards the East, the Middle and the West Region of china, it concludes the following views. As a whole, FDI works positively for our technology improvement. The direct technology effects of FDI show positively in the East and the Middle Region, but in the West Region, the result is quite the opposite. The indirect technology spillovers are not a prominent factor in the East. In the Middle, it works mainly with the higher educated labors, while in the West, it spills mainly with the secondary educated ones. Finally, this paper puts forward some relevant policy suggestions. |
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