An Empirical Analysis Of The Foreign Direct Investment In China Technology Backward Spillover

During the30years rapid economic development of reform and opening-up, China, as one of the largest developing country in the world, takes more research on attracting foreign investment to promote economic development on the base of studying its own model of economic development. But it takes little research on technology spillover of Chinese enterprises going out to invest in Africa and other developing countries, even direct investment in developed countries such as Europe and the United States.The impact on all aspects of the host country because of the home country direct investment has been widely confirmed. At the same time, studies show that the cross-border investment affects not only the host country but also technology adverse spillover of the mother country. Outward Foreign Direct Investment (OFDI) is an important channel of international technology diffusion and a convenient way of rapid technological progress in developing countries.This paper reviews the OFDI development of China to build the framework of technology adverse spillover on the base of classification and summary of related literature. It verifies OFDI on the contribution of technological progress from theoretical and empirical validation and takes Zhejiang Province for example to analyze the association with OFDI and innovation. Statistical data of1985-2010indicates that OFDI did not play its due role in the technological progress of Zhejiang Province. On the other hand, the innovation capability of Zhejiang Province has a great relationship with local R&D funds. So China should not ignore its own research and development (R&D) funds while expanding foreign investment scale and focus on the quality and efficiency of foreign investment, in particular, should increase investment on rich R&D capital country on as well as in high-tech industries and manufacturing industries, and create favorable conditions for technology adverse spillovers.