A Study On The Technology Spillover Effect And Absorptive Capacity Of FDI In Shanxi Province

As the main way of international capital flowing, foreign direct investment (FDI) playsan increasingly important role in promoting the economic growth of one country, and at thesame time, whether its technology spillover effect can promote the technological progressof enterprises or not is paid more and more attention to by scholars. The research shows thatFDI technology spillover effect has a great difference in different countries and regions. Themain reason is the absorptive capacity of host country. As one of the largest province ofnational energy, FDI in Shanxi province has expanded each year. However, compared withthe five central provinces, there exists a great gap and the level of enterprise technology hasnot improved so much. Therefore, it is significant to study how to promote FDI technologyspillover effect and improve enterprises’ technology in Shanxi province. What’s more, FDItechnology spillover effect is playing a more and more important role to improveenterprises’ technology of the host country.In the present thesis, the author establishes a model to measure FDI technologyspillover effect, based on the relevant theory of FDI technology spillover effect and guidedby the Cobb-Douglas (C-D) production function. In addition, the author selects the relevantdata of Shanxi province from the year of1995to2011as research data to do an empiricalresearch for FDI technology spillover effect. Besides, the author adopts panel data modeland do regression analysis with Eviews. The analysis shows that FDI presents the negativetechnology spillover effect in Shanxi province, meaning that FDI technology spillovereffect has not made enterprises’ technology improved in Shanxi province.By analyzing11cities in Shanxi province, we can see that the city of Taiyuan, Datong,Yuncheng and Linfen manifest positive effect; while the city of Yangquan, Jincheng,Shuozhou, Changzhi, Jinzhong, Xinzhou and Lvliang present negative effect. In a further, by analyzing the quality of foreign investment, the industrial structure, regional structure,origin and the way of investment about FDI in Shanxi province, the author finds out that theabsorptive capacity of local enterprises is an important factor to influence FDI technologyspillover effect. What’s more, the author constructs absorptive capacity model based on theprevious model to examine the influence of absorptive capacity for FDI technologyspillover effect from the perspective of human capital, R&D, market system andinfrastructure. The analysis shows that the influence of absorptive capacity for FDItechnology spillover effect manifests negative effect. By combining the data from the fivecentral provinces, the author does a contrastive analysis on it.At last, the author proposes some advice that will improve the utilization of foreigncapital in Shanxi province, such as continuing to increase the human capital and R&Dinvestment, improving the market environment, encouraging innovation of enterprises,improving competitive system of the market and strengthening the construction ofinfrastructure.