Analysis Of Regional Effect Of FDI On Technology Innovation In China

Since reform and open- up, China has successfully absorbed a great deal of foreign investment, becoming a truly great country on the aspect of attracting foreign investment. The accumulation of FDI stock has played an important role of improving investment efficiency and resource utilization, promoting GDP growth and rapid economic development as well, which has been generally recognized by the academic community. However, whether the massive inflow of FDI has promoted technological progress and technological innovation capability in our country or not? There is a larger controversy in academic community at present, and this is precisely the focus of this paper to study.The focus of this paper is to analyze the regional effect of FDI on technology innovation in China. First of all, this article reviewed the relevant theoretical and wrote some comments. Then, on the based of that and take combination of our country specific data and case to clarify the impacting mechanism of FDI's technological innovation capacity. And on the basis of theoretical analysis, the writer used panel data(1999-2007)to empirically analyze FDI's specific impact on technological innovation abilities in different regions of our country (with patents in terms of quantity) from the national and regional levels, as well as different time periods. The research conclusions indicate that: FDI have a positive impact on China's overall technological innovation capability, especially in eastern region and the central and western regions have smaller impact. The difference among the market ability, economic potentiality and the research investment cause the regional difference of the technical absorption capacity. The aggregation effect of FDI promotes the technology innovation of the eastern region. With the rise of the economic base, human capital and the number of the person with ability, the effect of the FDI on technology innovation is more and more. But even in the developed eastern region, FDI that have a positive impact at innovation capability is mainly reflected at a lower innovative utility model patents. With the control of technology input from the SMEs, it's difficult to bring the core technology, even has the negative effect on the core technology innovation. So, the independent innovation is the only way to improve the overall innovation capability of our country.This article holds that China's local enterprises can actually get what extent of technology spillovers which FDI brought about is finally depended on the absorptive capacity of local enterprises. Therefore, the key of promoting FDI's technology spillovers is to create a fair competitive environment, improve the quality of our workforce, increase research investment, and the reasonable introduction of FDI according to local conditions and also attach great importance to technology digestion and absorption of re-innovation after the introduction. Moreover, we must know clearly that "market for technology"can not earn core technology, so when we are in the selection of introducing advanced foreign technology to their digestion and absorption of re-innovation, we must attach importance to cultivate the capacity of independent innovation, and independent innovation is the only way to improve the overall innovation capability of our country.