The Tendency To Wholly Own Subsidiaries Of FDI And Its Impacts On Technology Spillover

Since 1980s, the scale and pattern of absorbing FDI by China has undergone great changes. After 1996, the pattern of FDI has gradually transferred from joint ventures and cooperate ventures to wholly own subsidiaries. What is more, after the year 2000 the wholly own subsidiary became the dominant way of FDI while the tendency is a more and more hot spot. In view of this tendency, most of scholars are wondering whether this tendency do good to the technology spillover. As to the positive effects, with more controlling of ownership, foreign enterprises are able to introduce more advanced technology and managerial expertise thus set a good example for the local enterprises. However, due to the current research, the negative effects are concerned by many people. They hold the view that the expansion of ownership will hinder the development of technology spillover effect. Therefore, this paper, using an empirical study on these two different investment patterns and analyzing the several factors which influence the spillover effect, puts forward several opinions about whether the expansion of ownership will do harm to the technology spillover effect.This paper includes four parts. The first part is an analysis of theories such including the theory of investment of FDI, the theory of technology spillover and other relevant theories. It lays a theoretical foundation for the foreign investment of the FDI. The second part is an analysis of the tendency, character of the wholly own subsidiaries and the main factors influence technology spillover. The third part is the impact on technology spillover of the tendency to wholly own subsidiaries. This part uses a series of datum and studies the impact on the technology spillover of the tendency of wholly own subsidiaries with both empirical and qualitative analysis. The last part gives several suggestions according to the negative impact on technology spillover by the tendency to wholly own subsidiaries.The study of this paper shows a reverse U shape and non-linear relation between the amount of the FDI spillover and the proportion of stock-holdings of the MNCs. Before the proportion reaches to a certain number, the technology spillover effect of FDI will raise with the increase of this proportion. However, after the proportion gets to the number, to add more stock-holding leads to the decrease of the technology spillover effect. The exact number needs a further discussion due to the lack of datum and other reasons.