Enter And Spillover Effects Of Fdi, The Regional Innovation System

As one of the most important carrier for the capital and technology to flow within theworld, FDI is widely considered as a good way to improve the economy ofdeveloping countries. But more and more found that FDI can hardly bring anybenefits for the host country if it only plays the role of manufacturing and assemblingplant for the MNCs. The advantages of cost, market and tax can bring FDI to the hostcountry, but it's not for sure if it can also bring the technology and manage skills thatthe host country really needs. To attain the goal of "Change the market for thetechnology", we must think enough of the relationship between regional innovationsystems and the innovation activities caused by MNCs, because only a good regionalinnovation circumstance can attract FDI with high degree of innovation.At the view of regional innovation system, we investigate effects of the regionalinnovation circumstance to the capital input and innovation input from FDI, and thespillover effects of FDI to the productivities and innovation performance of localenterprises.Based on the statistic data cross provinces from 2000 to 2005, we use factor analysis,regression method to study the subjects, and get some conclusion as below:First, the regional economic circumstance, regional innovation capacity and regionalhuman resource are all the key factors for the capital input and innovation input ofFDI.Second, as a whole, the capital input of FDI is not significantly positive related to theproductivity growth of local firms, and the FDI from other west countries is the mainreason for it. Because the capital input from Hong Kong, Macau and Taiwan canimprove the productivity of local firms, but the FDI from west countries is negativelyrelated to it at some extent, which means it causes the "squeeze out" effects to thelocal enterprises.At last, the innovation input of FDI is positively related to the innovation performanceof local firms. Combined with the above finding, we conclude that although theMNCs from west countries which are comparably more advanced in technology levelmay restrain the productivity growth of local firms in short terms, can improve thetechnology level of local firms and cause spillover effects in the long terms.