Analysis On The Impact Of FDI On Technology Innovation And Its Limiting Factors

In the open economy, the level of a country’s technology innovation depends on the indigenous innovation, the digestion, absorption and secondary innovation of international technology transfer as well as the the second method. Among them, technology spillover of foreign direct investment(FDI) is one of the main channels of the international technology transfer. Fujian, as one of the economy-developped provinces in China, is a pioneer of innovation and development. Analysis on the influence mechanism of FDI on technology innovation, and taking Fujian Province as an example for the empirical analysis, are helpful to make full use of technology spillover of FDI and improve the level of technology innovation in Fujian Province, and they have both theoritical value and actual meaning in accelerate the process of constructing innovational Fujian.FDI offers plenty of financial support for the economic growth of the investment provinces, and through the mobility of human capital, the demonstration and imitation, the competition and cooperation impact the innovational acctivities of the province; besides, the level of economic development, the opening degree and the level of financial development affect the impact of FDI on technology innovation. In this paper, we show visually the FDI inflows and the development of innovation in Fujian Province in recent years with data and charts, and discover the connection between the output of technology innovation and the pratical use of FDI. Based on the analysis, firsly collecting the time series date of FDI and patent indicators of Fujian Province in 1987-2013. And analyzing the influence of FDI on technology innovation by using one-way effect measure theory. The result shows that: firstly, the measure of one-way effect of FDI on technology innvoation of Fujian is 1.72, which shows the one-way positive impact by FDI on technology innovation of Fujian. And, the distribution diagram of one-way effect measure suggests that the positive impact of FDI on the technology innovation of Fujian is evident in a short period, then the impact subsides gradually till zero in the long term; secondly, from the impact of FDI on three different types of patent, in the short run, the influence of FDI on the patent of appearance design is the biggest; and in the medium term, the influence of FDI on the patent for invention is the biggest; In the long run,the influence of FDI on the patent for utility model is the biggest. Then using 2000-2013 panel data to explore the restricting factors behind the impact. The result shows that the level of economic development, opening degree and level of financial development in Fujian Province significantly promote the positive impact of FDI on technology innovation. And the biggest advance is the level of financial development. Finally, we explain the results of empirical analysis with economic explications. And put forward the relevant policy recommendations for Fujian Province based on the empirical results and the situation of Fujian Province.