Analysis Of The Effect Of ODI On Technology Innovation In China

Technological innovation effect of ODI is a relatively new topic of internationaleconomics at present. It’s Important both in theoretical and practical significance forour country to implement the strategy of "going out" and build the open economywith new system. This paper, based on the perspective of the input and output oftechnology innovation, studies the impact of ODI on China’s technology innovationfrom the aspects of theory and empirical.Firstly, we introduce the theories relate to the outward foreign direct investment.Based on the existing literature at home and abroad, we discuss the mechanism ofODI effect on our country’s technology innovation from the market scale effect,competition effect, the effect of ODI R&D cost sharing, feedback from overseasR&D, mergers and acquisitions applicable technology and talent flow effect. They’rethe theoretical foundation to the research.Secondly, we analyze the current situation of the development of China’s ODIfrom ODI investment scale, ODI investment main body, ODI industry distributionand regional distribution of ODI. Also, we study the present situation of the inputand output of technology innovation in our country from the general situation,structure and regional distribution. We find that ODI has an obvious regionalconcentration. It’s mainly in developing countries from the perspective of aninvestment country, but it’s mainly in the area of high innovation ability from thepoint of Local investment. Both R&D input and patent grants show a ladder-likedistribution, mainly in the area of high innovation ability.Thirdly, constructing a simple empirical analysis framework based on the modelof C-H and L-P and using provincial panel data from2003to2012in our country, weexamine the ODI effects on China’s technology innovation ability. The empiricalresults show that:(1) ODI has a significant reverse technology spillover effect on the high, middle andlow innovation ability areas, and the influence degree decreases gradually.(2) FDI has a different effect on China’s technology innovation ability. In otherwords, it has a promoting effect on high and low innovation ability areas, but notobvious; it has a inhibiting effect on high and low innovation ability areas, butnot obvious; it has an obvious inhibiting effect on the country.(3) The effect of R&D spending on China’s technology innovation ability issignificant, and further than the effect on FDI and ODI. (4) Human capital has an obvious influence on China’s innovation ability.At last, according to the empirical analysis results and the situation of China’sODI and technological innovation ability, we put forward some policy suggestions tomaximize the effect of ODI on technology innovation from the perspective ofimprove the ODI reverse technology overflow capacity and improve country’scapacity of absorptive, country’s capacity for independent innovation.