A Research On Chinese Producer Services FDI Spillover Effect

Foreign Direct Investment, which is thought to be an important resource of direct capital output combined with indirect technology spillover, is a package of elements output including packed capital, production technology, management technology and marketing means. The spillover effect by FDI externality is a significant way for developing countries of poor innovating capacity to obtain technology improvement, industry structure optimization and economical growth. Productive service industry, which connects service and manufacturing industry, as the by-product of social labor division, can significantly improve the productive efficiency of both service industry and manufacturing industry. So, productive service industrial FDI is an important stage of international industrial transfer in high-level evolution. As the great gap ofproductive service industry between China and developed economic bodies, it is quite necessary to utilize productive service industrial FDI to boost manufacturing and service industry development.So far, the domestic studies on productive service industrial FDI spillover effect are quite rare. This paper will do theoretical and empirical analysis to productive service industrial FDI spillover effect, separately by in-industry leakage and inter-industry leakage. As to the spillover channel, productive service industrial FDI is doing in-industry spillover to domestic service industry mainly by means of capital effect, supply-demand related effect, technology spillover effect; and inter-industry spillover to domestic manufacturing industry by means of supply-demand related effect, technology spillover effect, urging local productive service enterprises re-improving manufacturing efficiency and investing environment optimization to attract manufacturing FDI entering.This paper builds a theoretical spillover model for productive service industry FDI of both in-industry and inter-industry. On the basis of theoretical analysis, the paper would do empirical analysis to in-industry spillover effect of productive service industry FDI by provincial panel data from 2004-2013, I find that productive service industry FDI significantly promoted the development of domestic service industry; The forward linkage inter-industry spillover effect is significantly positive while the backward linkage significantly negative by Manufacturing industry panel data from 2004-2011. I also find that the regression result of labor-intensive manufacturing industry is similar to whole manufacturing industry, but the significantly forward linkage spillover effect is greater,and backward linkage become significantly. while the regression result of technology-intensive manufacturing industry shows opposite result after dividing manufacturing industry into labor-intensive and technology-intensive industry.At last, I would give policy recommendation based on the results given, looking forward to making full use of productive service industry FDI spillover effect to boost domestic manufacturing and service industry development.