Teoretical And Empirical Research On Foreign Direct Investment Spillovers Between Regions

In era of knowledge economy, a country just taking full advantage of of theirown resources alone to get sustain stable development is not enough, but need totake full advantage of other countries’ resources. For the host country, FDItechnology spillover is one of those important factors. This paper bases on theendogenous growth theory, international investment and new economic geographytheory. From the theoretical and empirical point of view, respectively, from themacro and micro level,this paper has studied FDI spillovers on domestic andinternational literature related to the system in order, even though domestic andforeign scholars of FDI spillover effects studies,but we find studies of technologyspillovers on spatial dimensions are relatively weak. In this paper, we use the mechanism of SIR Epidemic by mathematicaldeduction, explain the mechanism in the demonstration effect of FDI spillover space,training effect,"learning by doing" effect, competitive effect and weak spatialdistance principle. This paper also prove that technical support and informationspread according to the strong and weak ground propagation from near and far.This model is built in Cobb-Douglas production function, which is based on theuse of the panel data from1995to2009, using a first-order differential linearlogarithmic model, considering the time delay and the geographical distancebetween provinces. We also have integrated space matrix into the model. In the testdata stationarity and cointegration relationship between variables under the premiseof the regression analysis.The empirical results show that, although the fuction ofcapital, labour force to promote local economy is beyond question, but the foreigndirect investment spillover effect on productivity also can not be ignored. Theforeign direct investment in the region of the overflow is also obvious. Namely, inother regions (geographic distance adjacent areas) FDI levels to the regionalproductivity plays a positive role. Therefore, local governments need to take fully into account the regions of FDI technical spillover effects in attracting foreigninvestment policies competition. Local governments need to get information aboutFDI on the neighboring provinces and strive for attract types of foreign capitalwhich the neighboring provinces did not introduce giving the preferential policysupport. Local governments need to focus on" preserving domestication", ratherthan"relative", so as to avoid vicious competition, to make limited FDI nationwidein order to achieve optimal configuration.