Research On Fdi Spillover Effects From The Financial Development Perspective

Since the1990s, foreign direct investment (FDI) swarms into our country in great quantities, and keep increased year by year.With China’s efforts to enhance the introduce of FDI, the study on relationship between the study FDI and economic growth is more and more, FDI capital accumulation effect and the spillover effect, especially the latter, has become the focus of the scholars attention. The study found that the FDI technology spillover effect toward economic growth is restricted by absorptive capacity host country. Financial development, as the important elements of absorption ability, is receiving more and more attention because of the function to FDI technology spillover effect.Among the previous researches on financial market factors and FDI spillover, the researchers mostly focus on how to enhance the financial market intermediary effect to promote the host country’s absorption of FDI spillover, but ignore the point that financial markets may directly influence of FDI. The host country financial development, as an important investment environment, affects the investment ideas of transnational corporations, and then affects FDI inflows scale, even quality. This actually decided to the foreign capital itself spillover potential. In order to more comprehensive analysis, the paper do empirical study on these two propositions:influence of financial development to FDI inflow scale and the absorption of FDI spillover, based on reviewing related literature.The research on the financial development and FDI spillover exists a difficulty:choosing the index of financial development.This paper argues that connotation of financial development is so rich that hardly master from one-sided. Moreover, financial marketization in China is not well established and quality improvement of financial system is more important than scale enlargement. Therefore, besides the common scale index, the article introduces financial efficiency index, to accurately reflect the connotation of financial development.The paper summarizes research literatures related, and then analyzes how the financial development influences FDI spillover effect. On this basis, this paper carries out empirical test from two levels. The first level is to examine the relationship between financial development and import volume of FDI by using time series data of China; The second level is to test correlation between financial development and FDI spillover absorption by using provincial panel data of our country,and analysis the difference between the eastern part and midwest part.The empirical results show that:both expanding financial development scale and improving financial development efficiency can pull the FDI inflow scale; There is a positive relations between the financial development and FDI inflow scale; from the national overall, whether financial development scale or financial development efficiency can promote the absorption of FDI spillover; from the region, financial development scale and efficiency can promote FDI spillover effect in The east area; in the western and middle area, the financial development scale plays a positive role to FDI spillover effect, but, in a certain degree, the financial development efficiency restricts FDI spillover effect; there exists financial development "threshold" of FDI spillover effect in our country: in some regions such as some western provinces where economic development is not very good, the financial development level, especially financial system efficiency is too low to exceed the threshold level of FDI spillover effect, which cause FDI spillover effect can not be absorbed. In the end, this paper puts forward the corresponding policy recommendations based on the empirical conclusion.