The Study On FDI Technology Spillover Effect Through Backward Linkages In China

At the present stage, the process of economic globalization is speeding up, and moreand more enterprises in developed countries choose to run business abroad, so manydeveloping countries are also willing to accept investment from these developedcountries. Although this is good to increase host country’s capital stock, the mostimportant reason is that they can take advantage of the technology spillover effect offoreign direct investment to make progress of the host country. China, as a developingcountry, the existing technology capability is not advanced, and the ability to updatetechnology also need to be improved.In order to make our enterprise to achieve greaterprogress, we still need to rely on attracting FDI which brings technology spillover.FDI technology spillovers can work through industry spillovers or inter-industryspillovers. Between them, industry spillovers received extensive attention of scholars anda full study. With the worldwide distribution of production processes and strengtheningof the company’s global sourcing trends, inter-industry spillovers are more importantways of technology spillover. Therefore, how to use FDI to establish industryassociation to produce backward technology spillover effect is very necessary.Firstly, I analyzed the research background, and the significance of the research isderived by analyzing the literature review. There also is research ideas and methods;next part is the overflow mechanism of backward linkages spillover effect, mainlyincluding the main part of spillover, conditions of spillover and influencing factors; thesecond part is the analysis of the basic characteristics of China’s foreign direct investment,which reflects the representation of the manufacturing sector to foreign direct investmentin China and lays the groundwork for the empirical part. The third part is an empiricalanalysis, selecting2005-2011of China’s manufacturing sub-sector as the panel data,using the expansion of Cobb-Douglas model to prove the existence backward linkageeffect; and then based on three factor including the market orientation of multinationals,the source of foreign investment, and human capital to arrive at the conclusions of theempirical test. Finally, based on theoretical analysis and empirical researchconclusions,in order to deep backward linkages spillover effects and then to make great technological progress, we should take actions from four aspects:the first is deeping thedegree of industrial relevance, the second is improving the level of human capital, thethird is strengthening IPR protection，and fourth is adjusting government managementfunctions.