Research On The Reverse Technology Spillover Effect Of Outward Direct Investment Based On Absorptive Capacity

The reverse technology spillover effect in China is analysed theoretically and empirically in this paper, from the perspective of absorptive capacity. In the theoretical part, a general overview and features of China’s Outward Direct Investment (ODI) are studied firstly, then the How process of reverse technology spillover effect is described from the paths:demonstration-imitation、personnel flowing and platform effect. On this basis, we discuss how absorptive capacity influencing the spillover effect in technology gap、R&D investment and human capital aspects.In the empirical part, we apply Total Factor Productivity (TFP), calculated by method of Malmquist Index Approach in DEA, to measure technology and obtain the comprehensive indicator of absorptive capacity using Factor Analysis Method. Then a data sample of China’s30provinces (except Tibet) from the year2003to2010is collected to establish panel data models, with and without cross-term, to make a comparative anaylsis. The result indicates that technology spillover does not occur without combining ODI with absorptive capacity, and with one percentage point increase (decrease) in the cross-term, China’s technology will improve (reduce)0.02percentage points. Based on conclusions obtained, we build Threshold Panel Regression Model, with absorptive capacity as threshold variable, to prove the existence of double "threshold effect" of China’s ODI. The threshold estimate value is0.016and0.557, and only when the absorptive capacity reaches the threshold of0.557can reverse technology spillover can occur, in this situation, with one point increase in ODI there will be0.03points increase in technology level.But the technology levels of most of China’s provinces are below0.557, which limits ODI’s facilitation in technological progress. As technology gap is narrowing, the R&D investment and human capital should be increased in order to improve absorptive capacity and enhance the reverse technology spillover effect.