Time-lag And Threshold Characteristic Of FDI Technology Spillover Effect In China

Under the background of economic globalization,the economic exchanges and cooperation between countries have become increasingly active and close.In order to improve the international competition,many countries are strengthened the introduction of foreign capital.Developed countries(e.g.the United States)have adopted a policy of attracting the return of manufacturing capital to alleviate the financial crisis.Developing country represented by China has actively introduced foreign capital to accelerate the economic transformation.To quickly make use of the foreign direct investment(FDI)technology spillover effect is a common issue for all countries.There is time lag of the FDI technology spillover effect.While only one period lag or the same period lag of FDI technology spillover is analyzed in existing literatures,in which lagged variables are created without sufficient theoretical and empirical basis.Current researches do not address the temporal change of such effects,majority of which simply believe that FDI effect on the host country can be insignificant spillover or even crowding out,ignoring the dynamic process of FDI technology spillover effect over time.Wrong regression results may lead to systematic biases,as a result,the proposed advices for making use of foreign capital,and economic policies for developing industries naturally lose their functions of decision-making.Therefore,what is the lag period for FDI technology spillover? What factors affect the length of the lag period? How to shorten the lag period of FDI technology spillover effect? In this study,this series of questions will be investigated.The threshold effect mechanism of the time lag of the FDI technology spillover effect is theoretically analyzed.On this basis,a dynamic threshold regression model is developed.Using the panel data of 30 provinces and autonomous regions(excluding Hong Kong,Macao,Taiwan and Tibet)in the Eastern,Central and Western of China from 2001 to 2017,an empirical study on the dynamic process of FDI technology spillover effect over time in these three regions are ascertained.The threshold regression results show that there is time lag in the FDI technology spillover effect,and two inflection points are observed in the curve of time change process,indicating that the time lag of FDI technology spillover effect has double threshold.The time thresholds for the Eastern region are the fourth and eighth years,the Central region are the fifth and eighth years,and the Western region are the ninth and twelfth years.Time lag of FDI technology spillover is affected by five factors,e.g.,the degree of opening to the outside world,internal research and development(R&D)investment,human capital level,financial development level and intellectual property protection level.Targeting shorten the lag period of FDI and making better use of FDI,the following policies andrecommendations are proposed: i)system innovation,ii)adjusting preferential policies for foreign investment,iii)strengthening the state's targeted investment,iv)improvement of human capital fit.The threshold regression model is implemented to investigate the factors associated with the time lag of FDI technology spillover effect,whereby the lag period of FDI can be determined,supplementing the deficiencies of the existing literatures and laying the foundation for the subsequent empirical research.This study provides policy suggestions for China to make better use of foreign capital in the future,it is also of great significance for Belt and Road Initiative developing countries to take advantage of FDI technology spillover.