Empirical Research On The Technology Spillover Effect Of EU FDI In China

FDI brings the developing countries not only capital inflow, but also advanced knowledge, technology and management expertise. AS an important part of FDI, EU FDI is one of the main sources for China to gain the key technology. Through attracting EU FDI, China can learn these advanced technology and management expertise to promote the technological progress. However, EU always invests in big projects with high technology in China, which requires better ability of the Chinese domestic enterprises to learn the high technology. Meanwhile, the inflow of EU FDI made the domestic enterprises loses their market share and the ability of independent innovation in some ways. After a brief overview of the former study on spillover effect of FDI, this paper firstly summarize the history and situation of EU FDI, then analyzes its main characteristics and how they affect the spillover effect. After that, this paper gives a research on the ways of EU FDI technology spillover and analyzes the relevant restraint factors. Then, by using the panel data of 13 Chinese provinces/municipalities from 2000 to 2008, this paper construct an empirical model to examine the spillover effect. Finally, we get the conclusion and relevant policy suggestions.The empirical results of this paper show that:the average scale of EU FDI and the total amount of FDI from other regions has a negative effect on the TFP, which means these two factors are harmful for the technological progress, this is mainly because EU always invests with high technology by solely-owned enterprises. which makes it harder for Chinese domestic enterprises to absorb their technologies. However, the R&D expenditure of local government and the trade dependent degree has a positive effect on TFP, this is mainly because independent innovation not only helps the domestic enterprises to get higher technology, but also improves the ability of domestic enterprises of learning from foreign enterprises.