Research On The Impact Of Exchange Rate Fluctuation On Innovation Of Foreign-Related Enterprises

In the?2018 Government Work Report?,Premier Li Keqiang pointed out that it is necessary to speed up the construction of an innovative country,gradually implement the innovation-driven development strategy,and seize the opportunity of world technological reform.Innovation has become the key word of China's current and future economic plans,and it is also the only way for China's economic transformation and upgrading.The exchange rate is an important macroeconomic variable of a country.It is variety will affect and impact the real economy.After the exchange rate reform in 2005,the RMB exchange rate pricing was based on market supply and demand,and adjusted with reference to a basket of currencies,which was more flexible.In 2018,the RMB exchange rate went through a year of ups and downs.With the continuous reform of the RMB exchange rate formation mechanism,exchange rate pricing has become diversified and market-oriented.This paper analyzes the three ways of exchange rate affecting innovation activities of foreign-related enterprises through theoretical analysis:Technology spillover effect,cost saving effect and market competition effect.Then based on China's Shanghai and Shenzhen A-share listed foreign-related enterprises 2007-2017 data,this paper used mixed regression and fixed-effects models to study whether exchange rate changes have an impact on innovation activities of foreign-related companies,obtained the following conclusions:(1)the exchange rate is significantly positively correlated with the innovation activities of foreign-related enterprises,indicating that the appreciation of the exchange rate can promote export enterprises to carry out innovation activities;(2)the interaction between exchange rate and financing constraint variables indicates that financing constraints weaken the relationship between exchange rate changes and innovation activities of foreign-related enterprises;(3)the interaction between exchange rate and property variables indicates that the innovation activities of state-owned enterprises is more affected by exchange rate changes.The results are still robust after the endogenous test and robustness test.Through theoretical analysis and empirical tests,this paper shows that the appreciation of the local currency can promote the innovation activities of foreign-related enterprises.Therefore,combined with China's exchange rate reform process and the status quo of enterprise innovation development,this paper proposes policy recommendations.First,the Central bank emphases exchange rate pricing diversification.Second,the enterprises should use the appreciation of the exchange rate to select low-cost,high-tech products that suit themselves,amplify technology spillover effects and save import costs.Third,improving the supervision and management system of state-owned enterprises.Fourth,the government and relevant departments should introduce policies to encourage and guide foreign-related enterprises to strengthen innovation activities.