The Empirical Study On MNC Technology Transfer And China's Technology Innovation

The new classic growth theory tells us technology progress is the key headspring of economic growth. There are two approaches for a country to get the advanced technology: one is based on independent innovation; and the other is to bring in Foreign Direct Investment (FDI). Through digesting and absorbing the advanced technology come along with FDI, the innovation will be implemented. For generally speaking, the latter is much cheaper and takes less risk. The developing countries can take use of late-comer's advantage. Under the context of globalization and integration, as the main actor of international productivity and FDI, multinational corporations (MNCs) not only push the flow of labor and capital but also take increasingly effect on international technology transfer and technology spillover. Since the opening and reform policy implemented, China has been insisting on attracting FDI, with the hope of improving the technology level by absorbing the technology transferred by MNCs. Now MNCs has become one of the important powers of China's economic growth. But what is the influence to the technology innovation? A lot of disputes exist in academic environment, some treat "market for technology" a failure, while others believe FDI helps to independent innovation. Therefore, how to understand the relationship of MNCs technology transfer and China's technology innovation is what I am trying to find out in this paper.At the beginning the paper reviews the technology transfer and technology innovation theories systematically. With the guideline of these theories, it analyzes the Granger causality test of FDI and authorized invention patent from 1986 to 2006. The result is that neither Granger causality nor co-integration exists between FDI and authorized invention patent. On basis of the result, this paper probes into the reasons of "market for technology" policy failures from two sides—from technology input side and technology output side. The paper comes to a conclusion:MNCs technology transfer does not result in improving the technology innovation. To elevate China's technology innovation, we should focus on independent innovation, not MNCs technology transfer. At last, the paper tries to give some suggestions on how to improve China's technology innovation aiming to the problems existed in China's technology innovation system.