The Threshold Effect Of FDI Technology Spillover On China's Agricultural Product Processing Industry

During the past few decades,with the deepening of the international division of labor,and the further development of economic globalization,manufacturing has transferred to developing countries through foreign direct investment(FDI),because of the higher labor price in developed countries,while China,with a huge market,stable political situation as well as lots of cheap labor,has attracted foreign investors.China has become the main choice of capital and risk aversion,because of the impact of a series of events,such as the economic downturn in the United States and the political instability in Europe.According to the statistics by Department of Commerce,during 2017,35652 new foreign-invested enterprises were approved in China,up 27.8% year on year.877.56 billion had been actually paid,up 7.9% year on year,which makes China the second in the world.FDI has greatly impacted China's economic development,especially on the technology.Because agricultural products processing industry has the dual role of agriculture and manufacturing,the influence of FDI on agricultural products processing industry has received general attention among academics.Research on the relations between FDI and technical progress of agricultural products processing industry has increased gradually.Some research results show that FDI has significant technology spillover effect through model and replication effects,human capital flow effects and the associated effects,while other results show that FDI has blocked agricultural technology progress through its competition effects.What is the effect of FDI on agricultural products processing technology? The concept of "threshold effect" is presented by many scholars to interpret the different empirical results of FDI technology spillover,while technology spillover would happen when it meets those requirements.This paper analyses the existence of FDI technology spillovers effect in agricultural products processing industry,and whether there is a threshold effect? Is the spillover effect of FDI in agricultural products processing the same? Is FDI technology spillover in agricultural product processing industry unique? Is it different from other industries? In this paper,we use 2008-2016 year panel data through the Coe-Helpman technology spillover theory,analyzing FDI technology spillover and threshold effect of agricultural products processing industry by using Hansen's threshold model.Then use set pair analysis method with the result of multiple threshold for comprehensive analysis.Finally,compare the threshold effect of agricultural products processing industry with high-tech industry at the end of the article,while analyzing the uniqueness of the agricultural product processing industry.This paper focuses on the following aspects and the conclusions are drawn as follows.Firstly,analysis of technology spillover and threshold effect of FDI in agricultural product processing industry.In estimating the level of agricultural products processing industry technology,adopt DEA-Malmquist index to determine appropriate level of agricultural product processing industry TFP.This paper not only studies the technical spillover effect of FDI on China's agricultural product processing industry,but it also takes the threshold model into analysis framework.From the threshold analysis,at present China's economic development has not reached the level which could make technology spillovers;while lower openness,a higher level of agricultural products processing enterprises,the moderate per capita education investment and infrastructure construction could bring technology spillover;higher openness,excessive infrastructure and human capital investment can make FDI block the development of agricultural technology.Secondly,set pair analysis of multi-threshold index of technology spillover.comparing the effects of different threshold index based on set pair analysis,there is weak inverse power between FDI and technical progress of agricultural products processing industry in the eastern regions,and there is strong same power in the central regions.Technology spillover has negative effect in eastern areas compared with central areas,because of smaller space of technology spillover and crowding-out effect of FDI in eastern regions.FDI can complement the gap of R&D funds in the central regions,because there is no excessive competition and the space of technology spillover is greater.The relationship between FDI and technical progress in the western regions is strong inverse power,which is caused by its backward economy,inadequate infrastructure and low-efficiency working.Thirdly,the industrial uniqueness of FDI Technology Spillover Threshold Effect in agricultural product processing industry.Comparing the high technology industry threshold of FDI technology spillover effect with the processing of agricultural products,it is found that the result is very different between them.When the high-tech industry is below the threshold of economic development and human capital investment,FDI shows a positive technology spillover,which is not significant or negative effect above them.Considering the opening to the outside world,high technology industries FDI show the negative effects of technology when below the threshold.High technology industries FDI has positive influence among the eastern,middle and western regions,while it is bigger in middle and western regions than eastern region.This paper could raise many policy implications in theory and practice,such as attracting FDI and rationally utilizing foreign capital.While the most important policy implication deduced from these conclusions is that policy should be targeted to improve “absorptive capacity” in different areas to ensure FDI could promote the technology of our agricultural products processing industry directly and indirectly.