Research On The Influence Of Taiwanese Direct Investment On Technology Innovation In Mainland China

With the development of cross-strait economic and trade relations for nearly thirtyyears, Mainland China has become the largest outward investment destination forTaiwan. The actual use of Taiwan capital has reached59.13billion U.S. dollars,accounting for4.2%of total FDI. Therefore Taiwan is an important foreign investmentsource for Mainland China. The signing of ECFA is a major policy to further deepencross-strait industry cooperation. In the context of this circumstance, the characteristicsand effects of Taiwanese investment on the mainland is a topic worth exploring,especially whether or not Taiwanese direct investment promotes technological progressand innovation in Mainland China. Discussion of this issue will help us evaluate thequality of utilization of Taiwanese capital, and also provide a reference for the furtherdeepening of cross-strait industry cooperation and promoting cross-strait industrialtransformation and upgrading.This research is mainly based on empirical study, combining quantitative researchand qualitative analysis. Based on a large number of objective data, field research inKunshan, which has attracted the largest share of Taiwanese investment, and referenceto the relevant surveys conducted by Taiwan authorities, this paper analyzed andsummarized the characteristics of Taiwanese investment on the mainland, including theinvestment motive, industry distribution, regional distribution, and management features.On this basis, this paper established quantitative analysis model, using2002-2011provincial panel data to carry out regression analysis and test the technology spillovereffects of Taiwanese direct investment. Test results show that the Taiwanese directinvestment has not generated a significant positive spillover effect to the technologyinnovation of Mainland China. The technological innovation in most areas rely mainlyon R&D personnel and R&D expenditures. R&D personnel has a positive impact oninvention and utility model patent applications while R&D expenditures has a positiveimpact on all types of patent applications.On the basis of empirical analysis, this paper concludes that Taiwanese FDItechnology spillover effect is not significant, reasons including: the technology level ofTaiwan-invested enterprises is relatively low; weak absorptive capacity of domestic enterprises; the cross-strait industry cooperation not strong enough; Taiwan authoritiespolicies that hinder; mainland local government hold wrong concepts for attractinginvestment. Based on the conclusions of this paper, following policy recommendationsare provided: further eliminate policies that hinder economic and trade exchangesbetween the two sides; build cross-strait industry cooperation and exchange platform;transformation of local government’s ideas of attracting investment; improve domesticenterprises industrial supporting capacity; improve the absorptive capacity of domesticenterprises.