Empirical Research On Anhui Manufacturing FDI Technology Spillovers

In the time of economic globalization, Foreign Direct Investment (FDI) plays asignificant role in economy growth of host countries as a major form of internationalcapital flows. FDI solve the problem of shortage of funds of developing countries inthe course of economic progress. So FDI technology spillover effect has come tonotice for scholars at home and abroad.Theoretically, FDI’s entering into host countries brings technology spillovers.This, however, does not apply to the developing countries from empirical analysis.The main reason is absorptive capacity different from country to country. The size ofFDI technology spillover lies in the absorptive capacity of the host country on theconditions of foreign capital’s entering into host country. Since1960s, Scholarsoverseas began to study FDI technology spillovers theoretically and empirically.Chinese scholars came to pay attention to FDI since1990s. Currently, domestic studymainly focus on empirical study from the perspective of the country, while for thesome specific industry, the study is less. In fact, some regions such as Anhui havedifferent FDI technology spillover compared with the whole China. So this paper willstudy FDI technology spillover effect of Anhui in a empirical way to prove whetherany FDI technology spillover effect exist in Anhui’s manufacturing industry.This paper uses theoretical analysis and empirical analysis approach to study FDItechnology effect in manufacturing industry of Anhui. Firstly, it will give a briefintroduction about the achievements that many experts have made. Secondly, it built amodel of FDI technology spillovers on the base of Cobb-Douglas function. Based onthe panel date of27manufacturing sectors during1997-2005, the paper usesempirical method to estimate the technology spillover effect from FDI. The resultshows that on the whole FDI brings technology spillovers, more or less, to thedomestic enterprises.Finally, this paper makes the targeted policy recommendations on the ways ofenhancing FDI technology spillover effect in manufacturing industry of Anhui.