Research On Chinese Service Industry OFDI Reverse Technology Spillover Effect

The reverse technology spillover effect of outward foreign direct investment(OFDI)is, that the direct investment from the home-country to the host-country, to accesstechnology resources of the host-country and improve technological innovation of thehome-country through the flow of R&D resources from the host-country to thehome-country. In recent years, multinationals in developing economies entered into theworld market, especially the developed countries markets. Some multinationals inchina began to seek global technology resources, rising OFDI from china. Chineseenterprises achievement is transformation from low value-added to high value-addedindustrial chain, to access technology spillover in global market, to accelerate theupgrading of products, and to promote the capability of independent innovation.In order to technical progress from strategic view, the paper focuses on the effect ofreverse technology spillover on total factor productivity in Chinese service industry, andthe effect of OFDI promoting industrial upgrading. The research subjects of paper: whatare channels of reverse technology spillover to affect Chinese service industry? Howdoes international technology diffuse? Whether is the reverse technology spilloversignificant or not? The paper provides suggestions to encourage Chinese enterprises togo global in the end.In theoretical research, two ways of technical progress are innovation and imitation.There are three channels of OFDI reverse technology spillover from technical imitationprogress. The three channels are trade, inward FDI and outward FDI to accessinternational R&D capital stock. Then, the paper analyses how international technologydiffuses. Reverse technology spillover effect shows R&D resources are bidirectionaldiffusion, and technology could flow between the home-country and the host country,which breaking the restrictions of traditional theory about R&D resources output. At last,based on classic international R&D spillover model, the paper builds the knowledge-driven endogenous growth model, to explain the relationship between the reversetechnology spillover and the economic growth.In empirical analysis, it is examined by model that the effect of reverse technologyspillover on total factor productivity (TFP) in Chinese tertiary industry. The paperchooses time series data of1990-2010, and processes these data. Through cointegrationtest and vector error correction model, it is obtained that the long-term equilibriumrelationships among variables and short-term correction to long-term relationships. At last, the relationships between two random variables are examined by granger causalitytest. The empirical results show, that the significant positive relationship is not existbetween OFDI reverse technology spillover and TFP in Chinese service industry. Thereasons: first, Chinese OFDI is still in comparatively small scale, which is hard toaccess international R&D resources; second, Chinese enterprises are short of technicalactivation mechanism and the absorbing capacity of knowledge in OFDI, resulting inthe solidification of R&D resources; third, the channels of reverse technology spilloverare not smooth, because the host-country strictly limits its core technology diffusion.Based on theoretical research and empirical analysis, the paper put forwardsuggestions on Chinese enterprises, industries and Chinese government. Chineseenterprises and government should hold on go global strategy to seek advancedtechnology, and obtain more R&D resources to promote technical progress.