Research On The Relationship Between Fdi And Technology Progress In Zhejiang

From the Chinese reform, every province uses FDI which already becomes aimportant manner to develop area economy, FDI make up the shortage of domesticprivate investment and state investment and stimulate the development of areaeconomy. Zhejiang province lie in the Yangtza River delta of Chine which havealready absorbed the most FDI in China. How to make good use of FDI to promoteZhejiang technical progress is focusing more and more attention. Technology progressis the final source of economic growth. Whether FDI could boost host country'seconomic growth in long term actually depends on whether it could promote hostcountry's technology progress.In recent years, Zhejiang province has made some successes in the the use offoreign capital to promote technical progress. More and more people pay attention tothe effect of FDI on the development of technology , the public agreed on thetremendous achievement in using FDI, but the views about the effect of FDI ontechnology progress are different whether in theoretical field, business cycle orgovernment departments. Different scholars have different views on the effect of FDIwhich fall into three categories: positive, unrelated and negative correlation.Therefore, whether foreign direct investment in Zhejiang Province promote itstechnological progress, or hinder technological progress is necessary to be explicited .This thesis mainly researches on the relationships between FDI and ZhejiangTechnology progress. In order to explain the interaction of FDI and Zhejiangtechnological progress, the thesis analysis the mechanism of FDI and technologyprogress from the point of technological progress means(technology transfer,technology spillovers, R & D). This paper also analysis the situation of Zhejiangbetween technology progress and foreign direct investment, to show the FDI effectson Zhejiang technology progress, we have listed a number of examples to illustratethe status. After analysing of the Zhejiang situation , We believe that the FDI hadpromoted Zhejiang technology progress, although FDI had negative effects ontechnology progress.In order to further determine the specific relationship between the FDI andZhejiang technology progress, this paper adopt epirical study using Solow residuals to denote technical level for learning Zhejiang technical level changes and the FDI /GDP ratio of to represent the FDI. Through the establishment of the regressionequation we find a strong correlation between the FDI and Zhejiang technologyprogress. By employing Granger Causaltiy Test, this article found that inward FDI didcourse the technology development in Zhejiang, meanwhile, the findings also showsthat technology progress is a positive factor for inward FDI of Zhejiang.Given the conclusions made, the dissertation makes the following suggestions:First of all, bring properly FDI come into line with the industrial development; secondby induce technology spillovers, strengthen ties with foreign-funded enterprises; andfinally focus on technology absorption, enhance corporate absorptive capacity.