The Research On The Influence Of OFDI On Technology Innovation In China

Technology innovation of a country or an area has become a key factor to measure its comprehensive strength. China’s outward foreign direct investment has developed fastly these years. And its character of seeking advanced technology is also very obvious lately. Under the background of economic globalization, we can’t enhance our Technology innovation by just relying on research and development. Under this background, this paper tries to study the relationship between Technology innovation of China and outward foreign direct investment.This article firstly introduces the research significance of this issue briefly, and then defines some related concepts, such as outward foreign direct investment, technology innovation and reverse technology spillovers effect. Through reading the domestic and overseas documents related to this issue, this article conducts a review on the domestic and overseas documents. Then, it makes a summary of relevant theories and analyzes the mechanism of outward foreign direct investment’s influence on technology innovation of home country. On the basis of theoretical analysis, this paper brings in research and development expenses within budget and the number of Chinese patents applied for authorization to measure China’s technology innovation’s input and output, and carries on an empirical research on the influence of outward foreign direct investment on technology innovation in China. The empirical methods used in this article include testing co-integration relationship between different variables and establishing error correction model. Co-integration is a powerful concept, which means some economic variables are associated with a certain economic system. These variables have equilibrium relationship in the long run. In the empirical analysis part, this paper introduces foreign direct investment, international trade and GDP as control variables at the same time. Firstly it tests the relationship between China’s technology innovation’s input and outward foreign direct investment using the data from 2004 to 2013, which comes to the first empirical conclusion that there is a co-integration relationship between China’s technology innovation input and outward foreign direct investment. This means that there is a long-term and stable relationship between them. And China’s technology innovation input is significantly and positively correlated with the outward foreign direct investment of China. Then this article tests the relationship between the outward foreign direct investment and technology innovation output in China using the data from 2004 to 2013, which comes to the second empirical conclusion that there is a co-integration relationship between China’s technology innovation output and outward foreign direct investment. This means that there is a long-term and stable relationship between them. And China’s technology innovation output is significantly and positively correlated with the outward foreign direct investment of China. The error correction models of the above two groups of variables show that the short-term fluctuations of the equilibrium relations can be adjusted to equilibrium.At the end, the paper puts forward some suggestions to our government and enterprises in combination with theoretical analysis and empirical test conclusion. At the government level, this paper argues that the Chinese government should make policies to support our enterprises going out to technology developed countries or regions. Besides, the government should establish a set of mature legal system related to outward foreign direct investment. Meanwhile it should adjust the foreign direct investment distribution and improve the level of human capital in our country. At the enterprise level, this paper holds the opinion that enterprises should expand foreign investment scale under the case of strength allowed and take suitable foreign investment methods. In addition to these, enterprises should improve their absorption ability and innovation ability on their own initiative. At the same time, they should use advanced foreign management experience for reference to explore suitable management programs.