The Research On The Effect Of FDI On Technology Innovation

Since the beginning of reform and opening policy, China has made significant progress in attracting foreign direct investment (FDI) in the world, due to its positive policies. Currently, FDI has become an important force in promoting China's economic development. Most of scholars have proved the presence of the positive effects of FDI technology spillovers, but whether there are positive effects of FDI technology spillovers on China's technology innovation? This is what we want to study.At first, this paper investigates the effects of FDI on technology innovation of China's domestic enterprises based on the panel data of 35 manufacturing from 2001-2006. Results show that, in the entire industry, the FDI effects are unobvious. In labor-intensive industry, the effects of FDI are yet not obvious, but the effects of expenditures on science personnel are significantly positive. In capital and technology intensive industries, FDI generate extremely significantly positive spillover effects, science personnel and science expenditures on science activities also generate significantly positive effects.Secondly, this paper investigates the effects of FDI on technology innovation of China's enterprises based on the panel data of 14040 enterprises from 1998-2001. Results show that, For all firms, firm-level FDI had significantly negative effects on R&D input and output of firms. With more foreign presence in one firm, industry-level FDI had a greater positive impact on the R&D input and output of firms; for domestic firms, firm-level FDI had significantly positive effects on R&D input and output of firms. With more foreign presence in one firm, industry-level FDI had a greater negative impact on the R&D input and output of domestic firms; No matter it is a general firm or a domestic firm, it was showed that a firm's investment and production in R&D increased with its size and age.