The Reverse Technology Spillover Of Chinese Outward Merger&Acquisition And Greenfield Investment:Mechanism And Empirical Analysis

Nowadays technology is playing a more and more important role. There are many ways to gain advanced technology, such as an increase in R&D expenditure, a purchase of existing proprietary technology, learning from other enterprises, investing to the technology-intensive area etc. With China implementing international strategy, China is now the third large resource of FDI outflows. Many Chinese enterprises invest overseas to seeking for technology and available assets.Some academics have done research to figure out the mechanism of the reverse technology spillover of outward direct investment and testified by empirical study. I have studied those documents and find that there is more than one certain conclusion. Those focused on the reverse technology spillover usually take the outward direct investment as a whole instead of viewing from the respective of Merger&Acquisition and Greenfield investment. While those focused on the different of Merger&Acquisition and Greenfield investment usually ignored the reverse technology spillover.This essay outlined existing research results from both home and abroad. Then it analyses the mechanism of the reverse technology spillover of outward Merger&Acquisition and Greenfield investment, and the factors that exert an influence on the effect of the reverse technology spillover. It states the flow, stock, trend, industry distribution, difficulties and opportunities of Chinese outward direct investment and demonstrated by typical cases. On the base of theoretical analysis, the essay establish a regressive model to demonstrate the study above, taking TFP as the dependent variable and stock of R&D, stock of outward M&A, stock of Greenfield investment as the independent variable. The result shows that Merger&Acquisition can improve TFP as expected; Greenfield investment has a negative effect on TFP instantly while a positive effect on TFP in the next year. R&D exerts a stronger influence upon TFP than M&A and Greenfield investment do. The reason maybe that technology-seeking outward direct investments don’t account too much of the whole outward direct investments, and that the capability of study and absorb of Chinese enterprises is not strong enough. In the last part of the essay, there are some suggestions for both Chinese enterprises and government based on the theoretical and empirical result.