OFDI And China’s Technology Innovation

Technology innovation is the eternal motive force of development. A country’seconomic development impetus lies in the technical progress and innovation. Nowadays,because the market environment is not perfect, the initial policy distortions and domesticenterprises stage of adjustment and other factors, China is difficult to carry out independentresearch and development. At the same time, because of the “market for technology” strategy,the lack of domestic absorption capacity, by attracting foreign capital to promotetechnological innovation effect is not good. Therefore, it is necessary to Chinese activelycarry out OFDI, make full use of foreign advanced R&D elements to enhance theirtechnological innovation capability.The paper analyzes OFDI technological innovation effect in developing countries.Among them, considering the heterogeneity host countries, we emphatically analyzed R&Dfeedback effect and human capital incentive effect based on reverse technology spillover.With the help of international R&D spillover model, the paper made the empirical tests usethe provincial unit panel data from2003to2011. Results show that OFDI has a weakpositive effect on China’s technological innovation and only for developed host countryOFDI will generate significant reverse technology spillover. In general, its R&D Incentiveeffect is more obvious than extrusion effect and its human capital incentive effect is notsignificant. Play a significant incentive effect of OFDI on China’s technology innovation, butalso the need for a long-term continuous improvement process.Based on this, the paper uses threshold test method to measure the regional absorptivecapacity which based on economic development, R&D level and human capital. Resultsshow that GDP, per capita GDP and the development of higher education level have singlethreshold. R&D spending has double threshold as well as R&D density. Human capital stockexists triple threshold. Absorptive capacity over a certain threshold, the effect of OFDItechnology innovation will be improved significantly in some parts of China. A smallnumber of eastern coastal areas can effectively absorb the OFDI technological innovationeffect. The vast majority of central and western regions still not across the high threshold ofabsorptive capacity.