A Study On Technology Spillovers Through Backward Linkages From Multinational Enterprises In China

With the acceleration of economic globalization, each country has a tendency to introduce foreign direct investments for the purpose of utilizing technology spillovers from multinational enterprises to local enterprises. Research from home and abroad mainly lies in the area of FDI spillover effects within industries. As the global procurement of multinational enterprises appears in recent years, the role of backward linkages from multinational enterprises has become increasingly prominent. Therefore, the study on mechanism of backward spillovers from multinational enterprise shows its significance in theory and necessity in reality.In the qualitative analysis section, mechanism analysis is conducted on the basis of the definition of backward spillovers, which contains two parts:first, the integral parts of the whole backward linkage; second, explanations of the interrelation between each parts to work as a whole system. The spillover system includes three parts:subjects of backward spillovers, channels of backward spillovers and effects of backward spillovers. First, the subjects refer to the technology spilling side and the absorbing side. Second, the channel can be described as the following five ways:demanding linkage, standards setting linkage, techniques guiding linkage, personnel training linkage and industrial competition linkage. Third, the demanding linkage is associated with scales of economies effects, the standards setting, technique guiding, and personnel training linkage are associated with technical contact effects, while the industrial competition way is to establish competition effects.In the quantitative section, by calculating the ratio of foreign investment and industrial output, this paper constructed the "backward linkage" variable in an innovated way. From the regression of a panel data from39industrial sectors in China with a time span of consecutive four years, the results indicate that multinational enterprises in China do exist a significant positive spillover effects to local enterprises through backward linkages.On the basis of above analysis, an example of Motorola China Corporation elaborates the micro mechanism of backward spillovers in a specific way.Finally, from the national level, industrial level and corporate level, this paper put forward several policy recommendations respectively, which may contribute practical significance in promoting technology spillovers through backward linkages.