The Spillover Effect Of Foreign Direct Investment (FDI) In Shandong Province

As a main form of international capital flow, the spillover effect of foreign direct investment (FDI) has attracted increasing attention. The New Growth Theory argues that the technology progress is the source of economic growth. The reason why many developing countries attracting FDI is to get the global technology transfer and technology spillover, and enhance the independent research and development capacity, eventually realize the economic growth. Utilizing the spillover effect of foreign direct investment (FDI) to enhance technology capacity is also the major theory foundation of foreign capital policy of China, that is, exchange the domestic market share with advanced technology.As one of the major province of attracting foreign capital, the purpose of Shandong province attracting foreign capital is not only to provide sufficient capital for economic growth, but also to enhance the technology capacity and organizing efficiency of domestic enterprises by spillover effect of FDI. At present, there are many researches on spillover effect of FDI. However, due to the unbalance of economic growth in different regions in China, the spillover effects of FDI in different provinces are unbalanced. But there are few research findings using the empirical research methods, and the variable and the research methods can be improved.On the basis of remanding and supplementing variable and research methods used by the previous researchers, the author tries to analyze the spillover effect of FDI in Shandong province from 1997 to 2006, and analyzing the spillover effect of FDI in different cities and different industries, so as to find out whether the spillover effect of FDI exists in Shandong and the factor influencing the spillover effect.The structure of the thesis is as follows, the first part analyzes the significance of the research, the research methods and the new findings. The second part is the theoretical analysis and the Literature Review, analyzing the micro-mechanism of spillover effect of FDI and the factor influencing the spillover effect. The third part analyzes the current situation and the existing problem of foreign capital in Shandong province, and the spillover effect in Shandong province from angles of the whole province, different cities, and different industries. The fourth part tries to learn the experience of Korean in using the foreign capital from the prospects of investment policy, investment sources, and investment industries. The fifth part is the counter-measures of using foreign capital in Shandong province.The empirical research finds that the FDI in Shandong province did has the positive spillover effect, but the effect is not evidently positive. There is large gap among the east, central and the south parts of Shandong province in spillover effect of FDI. On the basis of theoretical and empirical research, the thesis gives the advice on enhancing the quality of foreign capital in Shandong, that is, optimizing the investment structure, creating a competitive market environment, increasing the science and technology investment, cultivating the independent R&D capacity, enlarging the human resource investment, encouraging the flow of workers between domestic and the foreign enterprises.