Research On Reverse Technology Progress Effects Of China Through Outward Foreign Direct Investment To The United States

With the development of China’s outward foreign direct investment(OFDI), obtaining reverse technology spillover effects and raising the level of technology have become an important expectation. The United States, as the world’s most developed and innovative country, is the largest OFDI destination except Hong Kong of China now. Along with the increasing scale of the OFDI to the United States, we should pay more attention to the reverse technology spillover effects from it. The existing literature has some disadvantages in the object, method and level of studying, which provides some innovation space for this paper.This paper aims at analyzing the reverse technology spillover effects of China’s OFDI to the United States. Firstly the study examine the situation and characteristics of China’s OFDI to the United States from the perspective of investing scale, subject, mode, industry and region since 2000, and find that China has made great progress but there are still some disadvantages. Then theoretically elaborates that gaining the reverse technology spillover effects has become an important motive of China’s OFDI to the United States, and then analyzes the path and mechanisms of it: the effects generate utility through the feedback mechanisms of research, return and human capital from three levels of enterprise, industry and nation to push our country’s technology progress. On this basis, the paper makes an empirical test by constructing time series about the relation between three channels of absorbing interward foreign direct investment from the United States’, OFDI to the United States, R&D spending and China’s TFP based on the L-P model. Thanks to the Stata software, empirical results are available which show the existence of the reverse technology spillover effects from China’s OFDI to the United States, but the effect is still limited, and there is a strong lag. The possible reasons are related to China’s capabilities of obtaining and absorbing technology. Finally, based on the theoretical and empirical study, this paper provides the suggestions that enterprise, industry and government should make joint efforts to improve capabilities of obtaining and absorbing technology to maximize the reverse technology spillover effects from China’s OFDI to the United States.