The Technology Effect Of FDI In Processing Trade

FDI has become one of the most important factor for Chinese ecomonic development. FDI in China has succeeded 600 billion usd during the 26 years from 1979 . FDI in China ranked the first place in developing countries and the third place in the world. With more and more FDI pouring in,Cina has gained high-speed economic increasing and foreign trade prosperity.But at the same time, we have been at the cost of material over-exhausting, devoid of core technology,lack of industry transition space and pollution strengthening, etc. Has our original will of exchange market for technology come into fact? Especially most FDI in China is in the way of processing trade with meterials and products both outward just simple process and assembly procedure in China. The effect of FDI in processing trade way such as drive or domestic industry and tax devotion is in dispute except distinct employment promotion. How about the technology flowover of FDI in China will effect more the policy of FDI and processing trade.In order to answer above question , I study on the two zones of FDI in processing trade way SND and SIP. In the base of analysis of the channel of technology flowover, I make demonstration study on the actural effect of the two zones by set up two models and find that the two zones has high technology flowover .Then I compare the two values of the two areas. The result is that the value of SND is larger than that of SIP before 2000 and after 2000 the value of SIP surpasses that of SND.The result of demonstration study is accordance with the actuality of the two areas. Then here gives the exlaination of the result especially the reason why the value of SIP surpasses that of SND after 2000. The value of SND is larger than that of SIP before 2000 is because SND has advantage of earlier-bird . SND established in 1991 while SIP established in 1994. In early days there are some friction in the two countries China and Singapore. But with time passed the two countries cooperated well and combined Sinpaore experience with Suzhou practice. And SIP has much advantage in the quantity and quanlity of FDI ,training of human recouses,standard of basic establishment, innovation of polity,etc.Through above analyse I give suggestion on how to improve technology flowover of FDI in processing trade way.