A Research On The Relationship Between Technological Spillovers Of Korean Direct Investment And Economic Growth Of Shandong Province

A large number of foreign direct investment has come into China since reforming and openning in1978. China has become one of the world’s largest countris that foreign direct investment flow into after30years of development. The reasons of China introducing foreign direct investment are that foreign direct investment can solve the lack of funds for construction and foreign direct investment can produce spillover effect, especially technological spillover efffect. Foreign direct investment has become an important way of international technology diffusion with the devel opment of the world economy, and technology spillover of foreign direct investment has played an increasingly important role in the host economy. Technology spillover effect of foreign direct investment can improve the production technology level of the host country, which can lead to the improvement of the production efficiency of the host country, and then foreign direct investment can promote the economic development of the host country.Numerous studies show that foreign direct investment produces technological spillovers, which can improve the technical level and the organizational efficiency, then foreign direct investment can improve the production efficiency of the host country, promote the economic growth and guide the national economy to the path of endogenization. Technological progress is an important factor in determining longterm economic growth with respect to capital and labor, as endogenous economic growth theory said. The economic growth model of endogenous economic growth theory use technology as one of the explanatory variables to endogen ize techno logy. It can be sa id that, foreign direct investment can lead to technological progress and long-term impact to the economic growth of the host country if technological progress is an endogenous variable. Scholars pay More and more attention to the technological spillover effects of foreign direct investment with the gradua I deepening of foreign direct investment in both domestic and foreign academic study, and it has been an important purpose that countries attract foreign direct investment to promote the economic growth of the host country.The Thesis takes Shandong Province as the research object and studies the relationship technological spillover effects of Korean direct investment and economic growth. Theoretical basis is the theory of developing coutris introducing foreign direct investment, economic growth theory related to technological spillovers, the theory of technological spillover of foreign direct investment, and generation mechanism and influence factors of technological spillovers. First, the thesis analyzes the status of Korean direct investment and the economic development of Shandong Province. Second, the thesis analyzes the status and reasons of Korean divestment in Shandong Province. Third, the thesis carries on the empirical analysis of the relationship between Korean direct investment and the economic growth of Shandong Province. Forth, the thesis carries on the empirical analysis of the relationship between technological spillover effects of Korean direct investment and the economic growth of Shandong Province through the intermediate variable. technological level.The empirical results show that on the one hand, there is a causal relationship between Korean direct investment and the economic growth of Shandong Province, which means Korean direct investment is one of the reasons why the economy of Shandong Province grows and economic growth is also one of the reasons why Korean direct investment grows under certain conditions. Korean direct investment has a longterm positive impact on the economic growth of Shandong Province in such a virtuous cycle. Shandong Province should maintain a positive attitude when attracting Korean direct investment; on the other hand, the increase of productivity of Keorean direct investment enterprises can promote the total factor productivity of Shandong Province and improve the technological level of Shandong Province, so Korean direct investment plays a significant role in promoting economic growth of Shandong Province.Final ly the thesis makes the following policy recommendations about how Shandong Province dealing with Korean divestment phenomenon, introducing Korean direct investment and using its technologyical spil lovers to promote economic growth. The recommendations are to improve the market mechanism, the property rights system and the legal structure, to introduce high-quality Korean capital adapting to the development phase of Shandong Province, to strengthen Korean multinationals contact with Shandong Province, to establish supporting industries in Shandong Province, to strengthen forward and backward linkages with Korean-owned companies, to encourage high-tech Korean enterprises to strengthen cooperation with domestic enterprises, to raise the level of human capital and increase investment in human capital, to increase R&D investment and to improve their technological innovation capability.