The Impact Of FDI On Technological Progress In China’s Automobile Industry

Since the reform and opening up, our country has attracted a lot of foreign directinvestment (FDI), in addition to supplying the domestic funds gap, what’s more important isits influence on our technology progress. Automobile industry is an important pillar industryof the national economy, with long industrial chain and high correlation degree; it is also anindustry which absorbs large quantities of FDI. However, doubts that―market for technology‖has little effect, or multinational companies occupies living space of domestic enterpriseshave been raised continually, thus the amount of FDI technical spillover has attracted muchattention by all parties. In this context, it is very important to re-examine the advantages anddisadvantages of introducing FDI, and it is of significance to analyze the FDI technologyspillover effort to automobile industry in our country and its influencing factors.The paper analyzes FDI development in Chinese automobile industry, including progress,actuality, characteristics. In the empirical part, the paper analyzes the direct effects of foreigndirect investment in the whole automobile industry, and makes an empirical comparison oftechnical spillover effect of automobile manufacturing industry and accessory industry usingthe data from1998to2012in China. Meanwhile the paper uses the econometric model tovalidate the spillover effects on the capability of independent innovation of automobileindustry. It turns out that the FDI spillover effect of automobile manufacturing industrymainly comes within the industry, when it comes to the accessory industry, the FDI spillovereffect mainly comes within and among the industries, and the inter-industry technicalspillover comes from the FDI of automobile manufacturing industry is larger than theintra-industry spillover comes from the accessory industry itself. The paper finds that FDIimproves the capability of independent innovation of the automobile industry, which benefitsthe output of utility patents that represent the core technology innovation, but it has a crowdout effect on utility model and appearance design.The paper tries to explain why the FDI spillover effects of automobile manufacturingindustry and accessory industry are different from many angles. Huge technologicaldifference between domestic investment and foreign investment, stronger absorptioncapacity and requirement of investment method all help automobile manufacturing industryto get more intra-industry spillover effect. Due to the factors such as intra-industryupstream-downstream relevancy degree, absorption will, competition level and howadvanced the technology is, accessory industry absorbs intra-industry FDI spillover effectfrom automobile manufacturing industry. Foreign investment has advantages of positivetechnology activities, out-put structure of patents and quantity, which help automobileindustry to improve the capability of independent innovation, especially the core technologyinnovation. This paper analyzes the problems of Chinese automobile industry using foreigncapital. Aiming at the factors which influence FDI technology spillover effects of Chineseautomobile industry, the paper gives corresponding suggestions from two angles ofgovernment and companies.