A Research On The Mechanisms Of FDI Spillovers

The productivity spillovers of Foreign Direct Investment has been an important research topic of the experts in this field. The research of FDI spillovers has great theoretical and practical significance. As for the result of competitive effect, the academic circle has aroused a great controversy. Hence, this paper tries to analyse competitive effects’ specific mechanism to provide an explanation for the relusts of competitive effects.Based on the earlier research, this paper construct a simultaneous equation about wage and TFP to discuss the direct and indirect mechanism of competitive effects. For the endogeneity problem of the simultaneous equation, we use Ⅳ and TSLS as the estimation method. Finally, we discuss the effects of exporting on the mechanism.The article firstly ues the data of30manufacturing industries from1998～2007Industrial Enterprise Database to analyse competition effects’ wage mechanism with the estimation methods of Ⅳ and TSLS. We found that the reslut of competitive effects is negative, as the foreign firms make domestic firms lose excellent labor and its TFP decreases as a result.Secondly, we divide the data into three categories:the ordinary-exporting firms, the pure-exporting firms. The estimating results showed that the resluts are also negative, but cann’t explained by the wage channels. There are two good reasons for it. Firstly, the result through this channel is positive as both the FDI wage-spillover effects and the relationship between wage and TFP is negative; Secondly, the result through this channel is not significant because of the insignificance of FDI wage-spillover.Finally, we provide the following suggestions on policy on the basis of our empirical results. Firstly, we should be careful and consider all possible effects on domestic firms when introducing foreign investment. Secondly, we should enchance the training of human capital to alleviate the shock of "talent stealing". Finally, we should guide and encourage the firms to conduct innovation activities under the pressure of increasing labor costs.