Use Of Foreign Direct Investment To Enhance The Level Of Domestic Technology Research

Three decades of reform and opening up, China adhere to the basic state policy of opening up and develop an open economy. With joining in the process of economic globalization, China's foreign economic is becoming an important component in the economic and social growth. Among them, the use of foreign capital is a core element of opening up and foreign direct investment contributes enormous to China's economy. By using foreign direct investment, the huge funding gap in the early development of our economy has been made up and the industrial structure has been promoted upgrading. FDI provides many employment opportunities and increases tax revenue in China to improve China's international competitiveness. FDI is becoming a key driver of China's economic growth. Especially in the lead of technological progress, FDI transferred foreign advanced technology, filled technology gaps and promoted domestic technological innovation. Above all, FDI increased China's technology level significantly.However, facing those positive effects which foreign capital provide for China's economic and social development, it is undeniable to realize that the extensive pattern of using FDI leads to some problems. For example, the FDI policy focuses on quantity other than quality, the investment areas and ways are imbalanced. Those problems impacted the pace by using foreign investment to promote China's sustainable economic development. In the aspect of using FDI to promote domestic technology increase, the numerous FDI brings a certain pressure to domestic technology. The one hand, the spillover effects of foreign capital was not significant, did not play its expected role, on the other hand there is crowding-out effect of FDI, foreign technology monopoly of domestic technology easily lead to dependency and undermine the ability of independent innovation. These issues affected the combination between using FDI and improving domestic technology level. The driving force of sustainable development is the domestic enterprises and technological progress. So the main goal of using FDI needs to be repositioned and develop new strategies to achieve the change from quantity to quality to maintain open economy independence and promote sound and fast economic development.The existing FDI literatures are more about FDI making up the funding gap and accelerating technological progress and structural upgrading. The ultimate driving force of sustainable development is the development of domestic economy. Therefore, this paper tries to coordinate domestic development and opening idea into the utilization of FDI and technology improvement and attempt to study the relationship between FDI and technology increase. By using the research method from theory to reality and normative analysis and empirical analysis, review the achievement and problems, reveals the reasons and provide suggestions. It provides a new perspective on using FDI based on those study.The main content of the present study is as follows:The first part is an overview of basic theories and includes Marxism economics and western economics theories. Marx and Engels paid a lot of attention to study science and technology on a huge role in promoting productivity based on the capitalist mode of production. At the same time, they are very concerned about the globalization of the world market and economic research. Those two constitute the theoretical background. Western economists has provided important ideas about maximize using FDI in China by their study on FDI and economic growth path.The second part describes the progress and problems in promoting domestic technology by using FDI. Through the empirical analysis, it summed up that FDI not only had technology transfer effect, competitive effect and the spillover effects in promoting domestic technology level, but also produced some negative effects, such as domestic technology spillover effects are not prominent, dependence on foreign technology and domestic technology is out and so on.The third part analyzes the reasons why FDI have negative impact on the level of domestic technology increase. Including the temporary stage of using FDI, foreign economic system is not perfect, the foreign and domestic companies' business purposes. It is a variety of factors together led to a large number of low-quality foreign capital inflows, domestic enterprises focus on introduction, other than digestion and absorption of advanced technology. Therefore, domestic enterprises easily trapped in the low technical level and no progress.The fourth part proposes the policy recommendation of using FDI to promote the domestic technology level. Clarify the purpose of FDI utilization is to focus on the quality and to achieve the development depends on domestic economy. To guide the FDI spillover technology to domestic enterprise needs to make efforts in economic structure, policy environment and industrial policies.Finally the the national economy mainly will depend on the promotion of technological innovation and international competitiveness will enhance by the endogenous model of economic development.