Empirical Research On The Relationship Of Foreign Direct Investment And The Independent Innovation Of Enterprises In Zhejiang

Since the commencement of the reform and opening policy, especially after the 1990's, China has gone through a huge growth of the foreign direct investment (FDI). And to some extent FDI has promoted China's economy growth. Has FDI promoted the independent innovation of the Chinese enterprises at the same time while promoting China's economy growth? Some scholars insist the use of FDI actually has rejected the independent innovation of our enterprises while some other scholars are on the opposite. This paper will focus on the following aspects: the relationship and the function mechanism between FDI and the independent innovation of Chinese enterprises; how does the FDI influence the independent innovation of the enterprises in Zhejiang.Based on the theory of resource endowment, China has a comparative advantage in labor and is comparatively lack of capital. Independent innovation is capital intensive so FDI is important for China and we should make use of the abundant capital that FDI can bring in. Using the 2003-2006 panel data of the eleven cities in Zhejiang, the paper analyzes empirically the effect of FDI to the independent innovation of enterprises in Zhejiang and explains the possible reasons why the result is that the relationship is not notable. Here comes to the conclusion. Zhejiang should strengthen the opening policy and attract more high-qualified FDI. The enterprises in Zhejiang should enhance the status of the independent innovation. Besides, Zhejiang government should make an effort to promote the positive combination of FDI and the independent innovation of enterprises in Zhejiang.