Analyzing The Technology Spillover Effects Transferred By Transnational Corporations In The Central And Western Regions

China has received large numbers of foreign direct investment since the reform and opening up. At first, the vast majority of foreign direct investment flows to the eastern coastal areas. And since the 90’s, as there are vast market space and a large quantity of cheap labor force, etc, the central and western areas have received more and more foreign direct investment. The foreign direct investment not only provides a strong financial support but also brings advanced knowledge and technology. Now the purpose of attracting foreign investment to the central and western areas is technology-seeking instead of fund-seeking. The main motivation is to use technology spillover of multinational companies to improve the capability of independent innovation and scientific research in order to stimulate local economic development. However, how much the technology spillover is and how the technology spillover effects the economic development in the central and western areas,which is barely explored.And this paper will analyze the technology spillover effects and find out their contribution to the economic development.First of all, this paper makes a deliberate review of the academic articles of technology spillover. Secondly, it uses the L-P (2001) formula with a reasonable transform to measure the technology spillover effects transferred by transnational corporations in 19 provinces (cities or districts) of the central and western regions in 1997-2006. Based on that, this article using the panel data of these provinces constructs an econometric model to find out how the technology spillover effects the development of economy in the central and western regions. The result shows that:Firstly, the main factor of the economic growth in the central and western regions is the R&D investment. Secondly, the capability of independent innovation does not play a significant role in the economic development. Thirdly, the technology spillover delivered by import trade does play a role in the local economy, but with little effect. And the technology spillover through the channel of production and management are negative. Finally, based on the conclusions made above, the article gives some recommendations on how to make better use of technology spillover effects and promote economic growth in the central and western regions.