Influence Of Transnational Corporation R&D Investment In China On Our Technology Innovation Capacity

This thesis is written under the background of two situations: the first is the plight of the manufacturing industry in China, and the second is the expansion of the transnational corporation R&D investment in China. Because of our weak technology innovation capacity, we stand in the downriver position of the international industry chain. So it needs to be studied that if the R&D investment of transnational corporation can improve our technology innovation capacity and this thesis tries to explain this problem.The literature review mainly focuses on the impact of oversea R&D investment on host countries. Because the logical starting point of the thesis is the fact that the transnational corporations already have much R&D investment in China, there is little explanation on the purpose and location choice of R&D investment unless necessary. As the study of domestic and foreign scholars on the impact of transnational R&D investment on host countries is scattered and lacking of system, we divide the relating documents into four types after summarizing, including the research on the function of R&D institution of the transnational corporations, the study on technology spillover effect of oversea R&D investment, the mathematical model research and the empirical research. This classification basically summarizes the efforts of domestic and foreign scholars on the study of impact of transnational R&D investment on host countries.Before formal analysis, the writer has summarized the basic situation about the R&D investment of transnational corporations in China these years and the basic features are as follows: firstly, R&D institutions of the transnational corporations have strong tendency of wholly foreign investment; secondly, the transnational corporations have extensive cooperation with domestic universities and research institutes while less with domestic enterprises; and thirdly, the R&D institution mainly focuses on technology adaptability research and little on basic technology research. According to the abovementioned facts, this thesis begins to study the impact of foreign investment R&D in China.In order to reveal the connotation of technology innovation capacity of China, the study is based on national innovation system. After analyzing the content and structure of national innovation system, we get conclusion that the essence of national technology innovation capacity is based on the technology innovation capacity of its interior innovation subjects and their uniting interactions. This thesis analyzes the influence of transnational corporation R&D investment on our national innovation system from two perspectives, by comparing national innovation system including the R&D investment of transnational corporations with before. The first perspective is resources distribution in which we mainly concern about talent and capital, the two most important technology innovation resources. Our resources distribution mode is greatly changed by R&D investment of transnational corporations: as talent flow into R&D institutions of the transnational corporation, the quality of our domestic scientific talent is improved, which provides the possibility for technology spillover effect, but also brings out the phenomenon of"domestic talents drain"; transnational corporation's great strength in capital provides a new source of our R&D capital, but at the same time it causes crowd out effect on our innovation subjects, especially on domestic enterprises. The second perspective is the interaction between the R&D institution of transnational corporations and our own innovation subjects. Transnational corporations develop extensive competition and cooperation with our domestic innovation subjects, which brings a considerable influence to their technology innovation capacity. Such influence is realized through technology spillover effect. So before making a research on the interactions between the transnational corporations and our domestic innovation subjects, we must analyze the technology spillover effect and the factors that influence it.According to the analysis of technology spillover effect by domestic and oversea scholars, the technology spillover effect is divided into two types which are concomitant technology spillover effect and stressful technology spillover effect. Concomitant technology spillover effect is mainly brought out through talent flow and demonstration effect, going with the R&D investment of transnational corporations naturally. Stressful technology spillover effect is mainly realized through competition. The factors influencing concomitant technology spillover effect are the function of transnational corporation's R&D institution, the ownership structure of transnational corporation's R&D institution and the technology absorbing capacity of our domestic innovation subjects. The main influencing factors of stressful technology spillover effect are market structure, initial technology capacity of indigenous enterprises and concomitant spillover effect. The concomitant spillover effect not only exists in the cooperation between the transnational corporations and our domestic universities and research institutes, but also in the competition between the transnational corporations and indigenous enterprises, while the stressful technology spillover effect mainly exists in the competition between domestic and foreign enterprise. This thesis will discuss the influence to domestic innovation subjects made by R&D investment under the above frame of technology spillover effect.As enterprise is the most important innovation subject, this thesis has established a two-phase dynamic game model to explain the R&D competition between transnational corporations and indigenous enterprises. From the model we come to a conclusion: because of the low initial technology capacity, our domestic enterprises probably choose to quit instead of to put in R&D competition with transnational corporations, the crowd-out effect is obvious but it is weaken because of concomitant technology spillover effect; if indigenous enterprises are able to compete with the transnational corporations in research and development, the concomitant technology spillover effect will bring some inhibitory effect to the R&D investment of indigenous enterprise. For the cooperation between transnational corporation and domestic universities and research institutes, the thesis mainly focuses on four different cooperation modes: project commission mode, associated R&D mode, talent cultivation mode and R&D institutions co-constructing mode. The cooperation level rises in order according to the abovementioned four modes, and the concomitant technology spillover effect increases in sequence. In cooperation with transnational corporations, the technology innovation capacity of our domestic universities and research institutes is also increased. Finally, we study the interaction relation between China government and transnational corporations; actually, it is a game relation between China government's R&D investments inducing policy and transnational corporation's R&D investment policy in China, which reaches Nash equilibrium when they both adopt trigger strategy.The empirical research part chooses the patent application quantity of domestic enterprises, universities and scientific institutions to represent their technology innovation capacity, and represents R&D investment of the transnational corporations by their patent application amount in China and establishes two linear regression models. At the same time, the thesis takes the data of 2003-2007 to make a regression analysis and the result validates the conclusion in above theory part. In the last part, the thesis puts forwards some suggestion to reduce the negative effect of foreign R&D investment, including promoting the cooperation between domestic enterprise and universities and leading the indigenous enterprise to take"go abroad"strategy.Since my limited ability, this thesis has following deficiencies: firstly, the analysis of concomitant spillover effect is over theoretical and lacking of investigation-style empirical research; secondly, the game mode part only discuss the market structure of double oligarchies monopolization, without other market structures; finally, it is another deficiency of this thesis that the research of technology production functions and technology usage functions is lacked here.