FDI Technology Spillover Effect On The Domestic Chinese Auto Companies

The rapid development of foreign direct investment is an important feature of theworld economy since the1990s. The automotive industry, a pillar industry in China, hasbecome an important area of FDI. China has implemented the strategy of "market fortechnology" since the Reform and Opening up, which has introduced automobile industry alarge number of FDI. Multinational Corporation, as the human resources and technicalcarrier, usually has higher technical level than that of local businesses of the host country(or region) that makes technology spillover effect to the reality. However, technologyspillover effect is not spontaneous and is influenced by many factors. Moreover, due to theentry of FDI, combined with the low productivity, lack of investment in scientific andtechnological innovation and other factors, China’s domestic auto companies may bemarginalized in competition. Therefore, with appropriate policies, actively guidance of thecontinued development of the domestic-owned auto companies, the study of the law ofgeneration of technology spillover effect of FDI in China’s automobile industry is a veryimportant method to upgrade the technological level and enhance the capability ofindependent innovation.There are six chapters in the thesis. The first chapter is the introduction, whichdescribes the research background and the significance of the topic, explains the basicconcepts, research ideas and structural framework, also the innovation and shortage of thethesis. The second chapter is a literature review of technology spillover effect on FDI,including the theoretical and empirical analysis of the domestic and international literaturereview, understanding of the methods used in the empirical analysis, variable selection,data collection and model building. The third Chapter3is a comprehensive and systematicunderstanding of FDI technology spillover channels and mechanisms. The fourth chapteranalyses the development of FDI on China’s auto industry, and the impact from FDItechnology spillover effect. The fifth chapter is the focus of this article, which establishesmodel and uses time series data for econometric analysis and empirical test. The purpose ofthe empirical test is to find whether FDI technology spillover effect has impacts ondomestic-owned auto companies, if yes, it is positive or negative. Besides, based on theresults, analyzes the main factors that affect FDI technology spillover effect further play.The last chapter is the conclusions of the paper that analyzes the way to make use of FDItechnology spillover effect better to propose China’s auto industry develop more rapidly.And provide the basis for policy development of China’s relevant departments.