Foreign Direct Investment, Technology Spillover And Zhejiang Economy Growth

According to Blomstrom (1998), technology spillovers are referred to economic external effects, they are said to take place when the entry or presence of MNC (Multinational Corporation) affiliates lead to productivity or efficiency benefits in the host country's local firms, and the MNCs' are not able to internalize the full value of these benefits. Besides boosting capital accumulation, enhancing investment quality and creating job positions, the long term and detrimental influence on host countries of FDI lies in technology spillovers. The first foreign direct investment corporation was established in Zhejiang province as early as 1980's. With the opening up reform proceeded, the scale of foreign investment continue to be extended which has become the important constituent part in Zhejiang's economy. In recent years, the foreign investment structure has been improved, great projects has been accelerated, more foreign investment has been used in manufacture industry,modern service industry and high technology industry. Therefor, making a deep research in technology spillover is extremely meaningful.Based on the practice of making use of foreign investment in Zhejiang province, this article heavily relies on large amount of data analysis and econometrics analyzing tools' operation. The first two chapters put forward the research propositions and framework. It generates a literature review which summarizes the existing studies by theory foundation, economic growth theory, industrialization theory, econometric studies, case studies and empirical studies in China, points out the deficiencies lie in the existing studies, then clarifies the main research issues and constructs the research framework. Afterwards, this article start to analyze following the two main clues, one is FDI and the growth of Zhejiang economy, the other is technology spillover and the growth of Zhejiang economy.The next chapter compares Zhejiang and Jiangsu in FDI scale, distributing, quality, main source and utilization channel from the point of view of condition and performance. It concludes that FDI of Zhejiang is not far away from Jiangsu. At the same time, the chapter also put emphasis on analyzing the relationship between FDI and the growth of Zhejiang economy. The next three chapters construct econometrics models to measure the technology spillover effects from the area, industry and corporation aspects. The first two aspects measure the technology spillover effects, while the third aspect measures the absorptive capacity.At last, this article put forward a few new and highlighting conclusions around the above mentioned clues and gives several suggestions on the basis of the preceding conclusions.