Study On Technological Progress Effects Through Foreign Direct Investment Of Chinese Enterprises

With the advent of knowledge-based economy, technological progress become the decisive factor for a country's economic growth. The improvement of the technology level mainly comes from the domestic technology innovation and the usage of various kinds of technology diffusion channels so as to study, absorb and imitate to advanced knowledge. The latest research confirms that outward FDI can generate the reverse technology spillover effect. In fact, outward FDI is not only able to bring technology diffusion effect for home country, but also can influence the ability of technological innovation of the home country. The World Investment Report in 2005 by UNCTAD, pointed out that a cross-border study on 30 countries found that outward FDI in R & D activities lead to the upgrading of domestic innovation , measured by the level of patent application.China is now from the phase of attracting inward FDI mainly to the phase of stressing both inward FDI and outward FDI. With the rapid increase of outward FDI from China, the economic effect has been gradually emerging. As a developing country, the"going out" strategy aimed at the promotion of domestic technological progress and industrial upgrading, At present, the research on the economic effects of FDI-out often focused on employment, industrial upgrading, trade structure, but little about technological progress effect through overseas direct investment. So, to put outward FDI, technological innovation and technology diffusion into an analytical framework, this research on the relationship between outward FDI and the technological progress of home countries is of very important theoretical and practical significance. In this dissertation, the theoretical framework of technological progress effect is building up and empirical study of China is carried out.Firstly, this dissertation has explored the research background, purpose and problem and defined the concept of outward FDI and technology progress. Then it has surveyed the relevant research and introduced the recent theory development of technology diffusion especially, which is about the effect of reverse spillover. Chapter Two has proposed a theory analysis frame including outward FDI, technology innovation and technology diffusion. Then, Chapter three visited China's foreign direct investment in history and its current situation. Following the above theory, the three chapters have carried out the empirical study for China. Through the above-mentioned study, we found that: (1) outward FDI has an active role in technological innovation of China by improving the efficiency of R&D resources to achieve the outputs instead of increasing R&D investment.(2) The effect of reverse technology spillovers exists significantly.(3)The effect of the R&D capital stock in domestic on domestic technological progress is mainly embodied in the learning effect, rather than innovation effect. (4) The integration effect of outward FDI and human capital stock is found to be positive on the design rather than patent. This result indicates that the level of human capital is limited, resulting in a limited absorptive capacity of the high-tech through learning and imitation. (5) Putting two faces of R&D into the analytical framework, we found that the two kinds of international technology diffusion are different in their role of improving technological level. The technology diffusion effect of FDI in China depends on the local skill level; reverse technology spillovers constraints mainly on the technical resources and technological environment abroad instead of the home country.This dissertation focused on technological progress effects through FDI out of China, which is less concerned about by domestic scholars. To enhance the capability of independent innovation in China is the main aim of "going out", this article thus is of important theoretical and practical value. This dissertation built on a theoretical analysis framework to explain the mechanism, which makes up for the lack of theoretical research; conducted an empirical test on the innovation effect of the R&D investment and technological innovation output capacity; put the two sides of R&D into the analytical framework and conducted empirical tests on the technology diffusion effect from the two different international technology diffusion channels. At present, the study about the technological progress effect through outward FDI is not mature, and research methods are to be explored further. This dissertation has attempted to give an analysis, while the lack of objective data makes it difficult to do so from the industry and the enterprise level in this article, which is to be extended later.