The Affection Of Foreign Direct Investment On China’s Automobile Industry Technology Progress

It is no doubt that foreign direct investment has a positive role in promoting the development of China’s auto industry, foreign direct investment not only provides a strong financial support to the development of China’s auto industry, but also introduces the advanced technology and management experience. However, at the same time, we should also see that Foreign-Funded enterprises, with its competitive advantage,such as advanced technology, management experience and so on, occupies greatly the market share of the domestic automobile enterprises, producing great Crowding Out Effect. China’s auto industry chooses the strategy of "exchanging market with technology", but is it really effective? Can foreign direct investment really promote the technological progress in China’s domestic auto industry?To distinguish two different technology progress mechanisms, this article divides the foreign direct investment effect on China’s automobile industry technology into direct effect and indirect effect. The direct effect means improving the technology level of the whole automobile industry technology through improving the level of foreign-funded enterprise’s own technology level, in contraction, the indirect effect means improving the technology of domestic automobile industry technology through the spillover effect of foreign direct investment.By choosing relevant data of China’s auto industry from 1998 to 2012, I carry on the empirical analysis.the analysis concludes that the direct effect of foreign direct investment on Chinese technology progress is positive,however,the indirect effect is negative. At the same time, the empirical analysis of the foreign direct investment’s impaction on the China’s domestic enterprise’s technology progress furtherly verifies that the indirect effect of the foreign direct investment to our country automobile industry technology progress is negative.To do a more comprehensive analysis of the influence of the foreign direct investment to China’s automobile industry technology progress, this article also analyzes the foreign direct investment’s impact on the research and development, the influence of different sources of foreign direct investment to our country automobile industry’s technology progress,as well.Finally, to fully use the effect of foreign direct investment to the automobile industry ’s technical progress, this article puts forward some suggestions, from the foreign direct investment policy, improving the absorb ability of technology spillover and so on.