The Motive And Spillovers Of Multinational Corporation's R&D Investment In China

With the deepening of the economic globalization since the 1980s, Multinational Corporations started to speed up the overseas R&D investment in order to adapt to the heated global competition. In this process, China has gradually become one of the most important destinations of Multinational Corporation' s overseas R&D investment. This research is designed to explore the motive and spillovers of Multinational Corporation' s R&D investment in China.On the MOTIVE side, this research utilizes unitary linear regression and multi-linear regression to find out the factors that attract Multinational Corporation' s R&D investment in China. The result shows that factors such as huge market, trade openness, human resource, and communication infrastructures play an important role in drawing Multinational Corporation' s R&D investment. However, different from other researches, our result shows that the factors such as labor costs and consumption level do not prove to be influential.On the SPILLOVER side, this research improves FDI spillover model (the Cobb-Douglas production function) by substitute the variable R&D INVESTMENT for the variable FDI INVESTMENT. We hope this modification of the model could specifically measure the spillovers of Multinational Corporation' s R&D investment in China. By using panel data we find that Multinational Corporation' s R&D investment issued a positive spillover in China, both on national level and regional level. However, the spillover effects decreased gradually from the East Region to the West Region. In the extended model, we examined how Trade Openness, Technology Gap and Human Resource influence the R&D spillover. The result shows that Trade Openness plays a positive role in accelerating the Multinational Corporation' s R&D spillover in China, yet Technology Gap and Human Resource blocked the spillover. Apart from the factors that could be regressed, there are also many factors unfit for regression, and those factors also blocked Multinational Corporation' s R&D spillover in China. This research put forward three suggestions base on the previous empirical analysis. The first suggestion is about how to attract Multinational Corporation's R&D. The second one is about how to utilize Multinational Corporation's R&D. The last one is about the initiatives of domestic enterprises.To conclude, the purpose of Multinational Corporation' s R&D investment in China is not for our benefit but to get high profits. If we totally rely on the Multinational Corporation' s R&D spillover, we shall lose our initiatives. As a result, while we are trying to make the greatest use of Multinational Corporation' s R&D spillover, we must encourage the innovation of domestic enterprises, and accelerate their speed of overseas R&D investment. Only in this way can we fully boost the development of our economy.