The Threshold Effect Of Fdi Spillover Effects

Over the years, the literature of foreign scholars in financial development for FDI technological spillover effect of the function increase gradually, and their basic theory mainly concentrated in the following tow aspects:1st as the representative of the advanced productive forces, domestic companies base on the theory of endogenous economic growth, their use of foreign direct investment technology spillover effect increase with foreign direct investment amount. For the host country, the speed of technological progress will get faster and faster for the FDI getting more proportion of foreign capital.2nd Financial development theory stress on financial development on the influence of the technological progress, the financial sector by raising the level of technology progress to get the effect on economic growth. In short, Theoretical study has found that FDI can not only contribute a capital accumulation effect to the host country, but also can lead it to a sustainable economic growth through the way of technology spillover. However, this promotion effect is restrained by several factors, while one of these is the development level of local financial markets.On the other hand, the number of FDI into China increasing, the role in the host country technological progress are gaining in importance. Theoretical study found, at home and abroad about the FDI technology spillover literature is an immense number of books, including, in recent years to absorb the ability to research have to say is to inspect the technical spillover effect of foreign direct investment in a new perspective and a new starting point. From the current theory see, the host country foreign direct investment absorption ability, the study is focused on human capital, trade openness, technology gap, etc. But papers of financial development perspective based on foreign direct investment absorption ability of influence are rare.In view of the existing based on the perspective of financial development on FDI absorption capability of defects, the author expand domestic and foreign literature for financial development of FDI, to promote technology spillover effect on development, the paper focuses on the deep analysis of the foreign direct investment in technology spillover about the development of financial threshold effect.Based on theory analyze, writer carried empirical study on the financial development's threshold of FDI technological spillover. The study found that FDI technological spillover's threshold effect exists, when the provinces over the minimum threshold of financial development, the FDI will significant promote technological progress of a province, and the higher the level of financial development, the greater in promoting.Therefore, financial development in promoting foreign direct investment technology spillover effect and technological progress make a very important role. Because China's provinces and cities of financial market is not developed, so our country's financial market has not obvious to promote foreign direct investment technology spillover effect. Therefore, it is necessary to further increase the financial support, and perfect the financial market, promoting financial development.After the research of the way of FDI spillover, starting from the Endogenous growth theory, the writer analyzed rationally how the financial development affects the technological progress of the host countries, which proves that the financial development promotes the efficiency of investment and the technic al progression. Based on the theoretical analyzation, the writer study the evidence effection which the financial development to the technological spillover threshold effect of FDI.Finally, this paper puts forward the specific policy recommendations on how to further the development of China's financial system and the perfection of financial market development to promote the technical spillover effect of foreign direct investment.