Study On Absorption Capacity Of Technology Spillover Effect Of FDI In Service

Since the 1980s, with the restructuring of world industrial structure and acceleration of the process of liberalization of services, the service sector has become the mainstream in the field of foreign direct investment, FDI in service accounts for more than 60 percent of global FDI. China’s service industry in 2011 for the first time exceeded the manufacturing FDI, and in 2013 China’s service industry accounted for 56% of the FDI. FDI investment service in China is increasingly significant. Therefore, study on the service sector FDI technology spillover effect and factors affecting the absorption capacity of its technology spillovers of host country appears extremely practical significant.On the basis of review of the relevant literature and theory, this article analyses technology spillover mechanism of FDI in service from four ways the competition effect, demonstration-imitation effect, personnel training-flow effect and correlation effect. Further, this article particularly analyzes the way of promoting the service industry technology spillover from the characteristics of the service industry itself in the four ways. This article analyses the size of technology spillover effect of FDI in service sector from the point of view of the host country, based on three levels of absorptive capacity of the host country, namely the service sector FDI technology spillover industrial base level, the level of service development is the basis of the level of FDI technology spillover; the ability of the host country level, the level of human capital accumulation is the ability of the size of FDI technology spillover; the external environment of the host country security level, the level of the rule of law provides a guarantee for the host country FDI technology spillover. Three absorption capacity factors all positively related to FDI technology spillover, namely the higher the development level of service, the more the stock of human capital, the higher the level of the rule of law, the stronger the absorptive capacity of the host country.In the empirical part, first of all, the service sector FDI is introduced into the endogenous growth models. Empirical testing shows that technology spillover effect of FDI in the service sector is more of in the promotion of the country’s technical efficiency. And impact of services FDI on TFP is sub-linear, two inverted U-shaped relationship, suggesting that the introduction of services FDI exists an optimal scale, which the introduction of FDI in the service sector is less than, the total factor productivity of the service sector increases with the introduction of FDI. But when the scale of the introduction of services FDI exceeds a certain value, with the continued introduction of services FDI, China’s total factor productivity and technical progress may drop due to excessive aggregation. Secondly, the absorption capacity of the service sector FDI technology spillover effect is analyzed and calculated by constructing a threshold regression model, conducting the threshold test and threshold effects regression. Studies show that the level of service development along with the level of human capital accumulation and the rule of law has a significant "double threshold effect" on FDI technology spillover effect of service. This non-linear relationship determines the level of service development, human capital accumulation, and the level of the rule of law at different stages have different effects on service sector FDI technology spillover effect, which concludes that absorptive capacity of the host country determines the size of FDI technology spillover effect of the service sector.Finally, this paper makes recommendations to enhance the absorptive capacity of every regions in China.