Research On FDI Technology Spillovers Through Backward Linkages

Technology spillovers from FDI have been a focus of attention to theorists for a long time. Generally speaking, technology spillovers are achieved by means of four effects: Competition, demonstration, training and linkages. This paper makes research on FDI spillovers through backward linkages.First, this paper makes a modeling verification of the effects that FDI backward spillovers have on the manufacturing industry. It establishes a regression model to reflect the relationships between FDI and its backward spillovers. Data from 23 industries in China is illustrated to conduct the empirical analysis. The outcome proves that FDI has obvious spillovers to our industry through backward linkages. In the process, factors such as capital stock, labor force and the ratio of FDI all have obvious effects on the spillovers.Second, this paper makes an empirical analysis on the dependent factors of FDI backward spillovers in three terms. Using the same regression model, this paper compares the influences of different factors. The outcome proves that, in term of MNEs, motives, scale and technology features of the investment have some influences; in term of the host nation, industries of high manpower capital, wide technological gap and great market competitions have more influences on spillovers; in term of production methods, this paper explains the influences of modularized value chain on backward spillovers, using China's automobile industry as an example.Finally, based on the above analysis, this paper puts forward some policy suggestions on how to upgrade manufacturing and improve backward spillovers. It also introduces the idea of modularized manufacturing strategies.