Fdi Spillover Effects Of China's Manufacturing Technology

Technology spill-over is the involuntarily pervasion of techniques through various channels owned by FDI, such as human resources, R&D and management. The research of this paper is based on the statistics of the manufacturing firms in 24 sectors gained in China Statistical Yearbook from 2000 to 2004. After the regression of all these statistics it is found that FDI generated .distinct technology spill-over effect in the local manufacturing industries. And characteristics of the industry such as the gaps in techniques, production scales and per capital investment between MNEs and local firms have different impact on the absorptive capacity of the Chinese domestic enterprises. The gaps in techniques and per capital investment have distinct effect on the absorptive capacity of technology spill-over while the gap in production scale doesn't. The local mobile phone and automobile manufacturing industries are typical sectors in case.In order to maintain their own superiority in technology, MNEs have used means, such as share control, the protection of intellectual property rights, M&A of local firms and human resource strategies, to control and reduce unwanted technology pervasion. All this will bring about negative effects on the technology spill-over, even spillovers in adverse direction.The technology spillovers can't be separated from certain policy and market competition environment. As China becomes more open in FDI, the.changes in market demand, competition environment and related policies will inevitably effect the absorptive capacity of local firms. The paper puts forward some relevant suggestion with regards to different aspects of national treatment, cultivation of affiliated enterprises and independent innovation.