Foreign Direct Investment Analysis Of The Technology Spillover Effect

With the deepening of globalization and the development of China’s reform and open, we have witnessed the great achievement of China’s FDI. Meanwhile, China is performing more and more actively on its outward direct investment (ODI), in order to enhance its political and economic status internationally. At the beginning of this century, Chinese government put forward the "going out" strategy, further clarifying the direction of China’s foreign economic dealing. After more than20years’development, China’s ODI has become increasingly stable and is gradually entering a stage of rapid development.The theory of developing country’s ODI gradually developed from dominant theory to technology-seeking theory. Early, developing countries attempt to introduce advanced technology by attract FDI, however it exists many limitations because of the regional and localized character of technology spillover. ODI makes up the limitation, which has a more direct access to advanced technology and technology spillover. Meanwhile, ODI can effectively improve the efficiency of technological innovation and promote the upgrading of industrial structure in developing countries.From the analysis of China’s2003-2010provincial panel data, the positive effect of ODI to total factor productivity (TFP) is significant. Further analyzing the data of different area separately, it is found the factors influencing the ability of absorbing spillover effect are different. To improve the situation, east area should pay more attention to stimulate demand, while east and center area should improve the financial and economic system.To better absorb the spillover effect and to improve high-tech level, the government should encourage investment in developed countries with high-tech, especially on technology-intensive industries. Enterprises should cultivate R&D and learning ability, focus on the cultivation of talent. Local government should improve its functions and provide strong support according to different characteristics in different places.