The Study On The Impacts Of China’s Marketization On The FDI Spillover Effects

It has been more than thirty years since Reform and Opening-up, China’s utilization of foreign direct investment continues to grow. At the end of2012, there are more than440,000foreign-funded enterprises in China already, and the amount of foreign capital utilized by FDI ranked first among developing countries. When promoting domestic economic growth by foreign direct investment, the technology spillover effect of foreign direct investment can not be ignored. Numerous studies have pointed out that foreign direct investment can generate inner-industry technology spillovers within the industry, and generate inter-industry technology spillovers between industries through industry-linkage. This paper mainly studies the intra-industry technology spillovers and inter-industry technology spillovers effects of foreign direct investment in China’s manufacturing sector, also investigated the impacts of marketization on the FDI spillover effects at the background of China’s economic reform.Using Chinese manufacturing enterprise’s panel data from1999to2007, to empirical analysis through clustering robustness of pool OLS regression method of panel data, The results showed that foreign direct investment generate negative effect to the domestic enterprises in the same industry, While domestic enterprises can get forward technology spillovers and backward technology spillovers, Forward technology spillovers and backward technology spillovers is the main way of absorbing foreign direct investment technology spillovers for domestic manufacturing enterprises. The paper further investigated the impacts of marketization on the FDI spillover effects, with the finding that marketization will negatively affect the horizontal technology spillovers effect, on the one hand, marketization mainly increases the market stealing effects of foreign direct investment, on the other hand the institutional improvement caused by marketization lag to restrict firm’s R&D, and therefore negatively affect the FDI spillovers. Furthermore, marketization doesn’t significantly affect the backward technology spillovers effect and the forward technology spillovers effect.