Research On OFDI Reverse Technology Spillover Effect In Service Industry

The Endogenous Growth Theory points out that technological progress is the source of maintaining steady economic growth. In background of open economic system, the technological progress of a country particularly depends on international technology spillover besides its R&D investment. The financial crisis of 2008 reshaped the global economic pattern, reverse technology spillover brought by Outward Foreign Direct Investment (Referred to as OFDI, the same below) has become an important way for developing countries to achieve industrial upgrading and technological progress. Although China’s OFDI started late, Chinese companies have been stepping up their global investment spree in the past 13 years. In 2014, China became a net capital exporter for the first time, and service industry in the stock of OFDI has already accounted for more than 70%, which indicates that the service industry has already substituted manufacturing as the main stream of international direct investment. Therefore, it is of great significance to research on OFDI reverse technology spillover effect in service industry.Based on the views of Zhu Tong and Cui Hao, this paper analyzes the impact mechanism of OFDI reverse technology spillover effect from two perspectives: investing in the developed host countries and developing host countries. In particular, when OFDI flows to the developed host countries, the reverse technology spillover effect is determined by the technology learning effect and the technology crowding out effect together. Further, the technology learning effect is mainly realized through the absorption mechanism of R&D elements and R&D results feedback mechanism, and the absorption capacity of the home country in which plays a regulatory role. When OFDI flows to the developing host countries, the reverse technology spillover effect is mainly realized through R&D cost sharing mechanism and peripheral technology stripping mechanism.On the basis of theoretical study, referring to C-H and L-P model, adding the variables that represent the absorptive capacity, this paper constructs the econometric model, and analyzes the OFDI reverse technology spillover effect of service industry in China empirically by using 2004-2014 years of China’s service industry panel data. Especially, this paper has comparative analysis from the perspective of industry difference and host country characteristics. The results show that:from the overall perspective of the service industry, the reverse technology spillover effect obtained through the OFDI channel is remarkable. The existing human capital level of the service industry plays a promoting role in the absorption of the reverse technology spillover effect, while the domestic R&D investment and financial development level play an inhibitory role. Through comparative analysis of industry characteristics, it is concluded that due to the low level of human capital and financial development, the spillover effect of OFDI in the technology intensive service industries is not as significant as it in non-technology intensive service industries. Through comparative analysis of host country characteristics, it is concluded that China’s OFDI in service industry that flows to low technology intensive countries can bring significant reverse technology spillover effect, while China’s OFDI in service industry that flows to high technology intensive countries does not bring positive spillover effect. This may be because China’s technology absorptive capacity is relatively weak, technology spillover channel is blocked, there is a certain lag of technology spillover and it is affected by crowding out effect of R&D capital in home country.Finally, based on the theoretical analysis and empirical research, this paper puts forward suggestions on the use of OFDI to improve productivity and promote the effect of reverse technology spillover in China’s service industry.