FDI, Capability Of Technological Innovation And Economic Transition Of Suzhou

Many reasons stand to explain the effects of FDI to promote the capability of technological innovation. This paper will study the effect between FDI and the capability of technological innovation qualitatively, and then examine the spillover effect and build-up effect of FDI separately by empirical analysis. Based on these studies, this paper will present opinions on Suzhou’s technology upgrade.Main points of this research are as follow:Qualitatively, the impact from FDI to the capability of technological innovation can be divided into the spillover effect, the build-up effect of FDI and other effects. The spillover effect of FDI impacts the capability of technological innovation through competition effect and local company’s copy, backward linkage and forward linkage, the flow of research staff. The build-up effect of FDI can be divided into the industrial agglomeration effect, opening-up of the domestic economy, accumulation of human capital, manufacturing capability and infrastructure construction. There are some other effects, such as the change of the market structure and value and so on can impact the capability of technological innovation.But empirical analysis shows that the spillover effect of FDI in Suzhou will not increase but restrain technological innovation. The reason is most of Suzhou’s FDIs are processors, they can not promote the capability of technological innovation due to their shortage of technology. On the other hand, the build-up effect of FDI strongly identify with the qualitative research.Promoting the capability of technological innovation is the key strategic initiatives for China’s economic transition. The build-up effect of FDI Stand to Suzhou’s technology upgrade, and this paper’s empirical analysis support this idea.