Research Of The Influence Factors Of Service Sector FDI Technology Spillover Effects In China

Since 2000, China has witnessed a robust development in service industry, In 2013, the annual increase of FDI in service sector reached 56%. On the other hand, many developing countries strive to absorb foreign direct investment to take advantage of the spillover effects. Under this background, it is of great importance to delve into the influence factors of FDI spillover effects in service industry.This paper firstly described the history and status of FDI in service industry. And then, we analyzed the conduction mechanism and influence factors of service sector FDI technology spillover. On the basis of theoretical analysis, an empirical research was conducted with both regional and industry panel data from year 2004-2012 to analyze the influence factors of service sector FDI spillover effects. We also divided 23 Chinese provinces into eastern, central and western regions to study the influence level of different factors respectively.Results from this research show that human capital, capital per worker and labor costs, etc, are all important factors that influence service industry FDI spillover. These factors also have different degree of influence in terms of eastern, central and western regions, In industry level, capital intensity, degree of competition and other factors could also significantly affect the service sector FDI technology spillover.In the end, we put forward several policy suggestions of service sector development for our government and firms.