A Study On The Impact Of FDI On Regional Innovation Capability Based On Absorptive Capacity

Accompanied by China’s foreign direct investment (FDI) continues to expand thescale, it has become the practical problems faced by our government and enterprises thathow to maximize encourage FDI spillover effects in China while reducing the negativeimpact. From the perspective of the absorptive capacity, this paper studies therelationship between FDI and regional innovation capability and does an empirical testby using the panel data of China’s29provinces from2004to2008. Conclusions of thispaper has important theoretical and practical significance for enriching the related fieldresearch of FDI and regional innovation capability and for formulating the attractinvestment policy in developing countries.Based on summing up the related fields of the foreign and domestic research, thispaper firstly gives some important definitions and provides an important theoreticalbasis. Secondly, this paper proposes a set of hypothesis and analyzes China’s regionalinnovation, FDI and absorptive capacity comprehensively and systematically. Thirdly,the paper establishes basic empirical econometric model on basis of theoretical analysis,and then establishes two extended models by joining the moderator of absorptivecapacity of human capital and R&D level, using the panel data of China’s29provincesform2004to2008. Finally, the paper presents policy recommendations for promotingthe absorption of FDI technology spillovers on the basis of conclusions.The results show that, to some extent, FDI promotes regional innovation capacity,but the more important factor of regional innovation capacity is innovation activities ofpersonnel and capital investment; the moderator of absorptive capacity of human capitaland R&D level plays a positive regulatory role in this process of FDI increased topromote regional innovation capacity. The paper discusses the internal relationship ofFDI, absorptive capacity and regional innovation capability from the theoretical analysisand empirical aspects, but there are still many deficiencies in the article because ofobjective restrictions on academic attainments author, and many problems have to befurther addressed. There are broad prospects and practical value for followingabsorptive capacity to study the impact of FDI on regional innovation capability.