Fdi Technology Spillover Effect

Technological advancement is the core competitiveness of economic development. The three great technical revolutions on the human development history are important sources to promote the innovation in mold and organization of production. Especially the new economy, represented by information industry, has been basic motivation to recent economic miracle in U.S.A. since 1990s. Technological advancement mainly relies on R&D and the absorption from every possible technology spillover. FDI technology spillover has been believed as an important factor for the developed countries to realize modernization, and as an important way for developing countries to share technological advancement all over the world: save R&D input, shorten the time of researching and applying the advanced technology, reduce the technological disparity with the developed countries, even become technological leader.FDI technology spillover, an external effect in economy, is influenced by many factors. Not all of the host countries could gain the effect. There are some channels to realize the effect, such as demonstration-imitation, competition, human capital circulation, linkage and concentrating. In order to fully utilize the effect, host country should make great effort in introduction, digest and innovation.In broad sense, FDI is the package resources including capital, technology, talent, management skill, market channel, brand prestige, etc., but the real resources transferring by concrete projects are uncertain, and the effect relates to the technological factor input embodied in FDI. Econometrics analysis using Feder model with the panel data of 2001-2003 years from our industrial sector supports the positive spillover effect, but the spillover effect is unsatisfactory.On the consideration of their own profit and game with our government and other adversaries statically and dynamically, MNCs confirm the transferred technology level. In the process of introduction foreign capital, the government should try to improve the investment environment, should attract more MNCs in every industry to form the rival pattern. That is to realize win-win: benefit to both MNCs and our government.Host country's absorption capability determinates whether the imitation and assimilation aboard technology and promotion technological advancement is successful. Human capital is the core of absorptive capability. Meanwhile, FDI technology spillover effect will improve the human capital accumulation in host country by educational signal mechanism and on-the-job training. There is a benign cycle relations among human capital, FDI and technology spillover effect.On the stage, fruitfully utilizing FDI technology spillover effect is still a strong point of foreign capital policy. It is essential to discover the rule and make appropriate policy to enhance the effect. Our government should engage in introducing higher qualitative foreign capitals, formulating leading policy, perfecting investment environment and cultivating enterprises' absorption innovation capability.