Double-edged Effects Of Technology Gap And Non-Linear Technology Spillovers Of FDI: Theory And Empirical Study

It has been generally recognized that technology spillovers could be brought by foreign direct investment (FDI), while the relevant empirical studies are divergent, which is may caused by the difference of data or estimate methods. However, the deeper reason may that absorptive ability of domestic enterprises was neglected when scholars tested the technology spillovers of FDI on host countries. Technology gap, as one of the most important indicators of absorptive ability for technology spillovers, has attracted wide attention of scholars, but a consistent conclusion of the mechanism of technology gap impacting on technology spillovers has still not been achieved: LDC can hardly benefit from the advanced technology of the developed countries to realize their frog-leaping in growth, at the same time, the areas with small technology gap between domestic and foreign enterprises were also failed to be proved a significant spillover neither. From this point, this paper selected the technology gap between domestic and foreign enterprises as the angle of view, to study the non-linear evolution mechanism of FDI technology spillovers. Combining theoretical and empirical methods, adopting dynamic spillover estimation model and threshold model, we brought forward the double-edged effects of technology gap to analyze the mechanism of this effects impacting on FDI spillovers for the first time, and provided a sufficient and reasonable interpretation to the paradox in past empirical studies.The main conclusions of this paper are: (1) there is a threshold of technology gap for FDI spillovers; that means the premise for FDI technology spillovers taking place is the value of technology gap greater than the critical level. (2) After striding over the threshold, the increase speed of FDI spillovers will be slow down as the rise of the value of technology gap. In another words, FDI spillover is marginal diminishing.This paper followed the research frame of"theory review- theoretical model - Empirical studies", and divides into five chapters。The first chapter reviewed the relevant theory and gained some enlightenment; Second chapter is Theoretical model, based on the quality-ladders endogenous growth theory, we assume the technology progress comes from innovation and imitation, and technology gap generates a"double-edged"effect on technology spillovers through influencing the absorptive capability of domestic enterprises and the effective technology choosing set of spillover. The study shows that this model can indicate conditional convergence, but there is a threshold of technology spillovers and a non-linear relationship between technological gap and technology spillovers. Furthermore, we tested these predictions with the provincial data on China's industrial sectors covering the period 1993-2006. Establishing the dynamic spillover estimation model and the multiple-threshold model respectively, the results of empirical estimates supported the theoretic prediction. Last chapter put forward the relevant policy suggestions.