The Effect Of Tendency Of Whole Owned Subsidiary For Spillovers From FDI

Since1980s, the scale and pattern of absorbing foreign directinvestment by China has undergone great changes. After1996, thepattern of foreign direct investment has gradually transferred from jointventures and cooperate ventures to wholly own subsidiaries. What ismore, after the year2002the wholly own subsidiary became thedominant way of foreign direct investment while the tendency is amore and more hot spot. In view of this tendency, most of scholars arewondering whether this tendency do good to the technology spillover.As to the positive effects, with more controlling of ownership, foreignenterprises are able to introduce more advanced technology andmanagerial expertise thus set a good example for the local enterprises.However, due to the current research, the negative effects areconcerned by many people. They hold the view that the expansion ofownership will hinder the development of technology spillover effect.Therefore, this paper will put forward several opinions about whetherthe expansion of ownership will do harm to the technology spillovereffect and how to make better use of foreign direct investment.with the statistical data of1995-2010.It establishes a regressionmodel about technology spillover, and got the estimation output.According to the estimation output, there is positive correlationbetween technology spillover and foreign direct investment includingwholly own subsidiaries and joint ventures in Shanghai. Furthermore, with statistical data of1999-2010in Shanghai, average gross domesticproduct as a dependent variable and effects of competition,demonstration and human movement effects, correlation effects asindependent variables, another model is established to explain howtechnology spillover affect domestic enterprises. It finds thatdemonstration and human movement effects are the most importantways. It gives such suggestions as follows: we should enhance thelinkage between foreign and domestic enterprises, taking advantageof human movement effects and encouraging foreign investors to setup R＆D centers, utilizing the function of market competition and allowforeign investors to set up companies as their wish.