Research On The Impact Of Two-way FDI On China's Innovation Capabilities

Since the implementation of the reform and opening-up policy for 40 years,China's economic development has made tremendous achievements,but also exposed many problems.The solution is that China should pay attention to high-quality economic development,and an important measure to achieve high-quality development is to enhance innovation capacity.International investment channels can often improve a country's innovation ability in a relatively short period of time at a lower cost,which is a relatively faster and more effective method.Over the past decade,both OFDI and FDI in China have developed rapidly and achieved remarkable results.However,the academic circles have not reached a consistent conclusion on whether China's two-way FDI promotes domestic innovation capability.In addition,the impact of two-way FDI on China's innovation capacity will not exist in isolation,but will inevitably be affected by many other factors.Therefore,this paper is devoted to studying whether the two-way FDI really enhances China's innovation ability,and examines the impact of various factors on the innovation effect of the two-way FDI in China.In the part of current situation analysis,this paper makes a comprehensive analysis of the achievements and problems in the development of China's two-way FDI.Specifically,the scale,domestic regional distribution,domestic investors,industry distribution,overseas location distribution and investment methods of OFDI in China are introduced in detail.In addition,the scale,domestic regional distribution,industry distribution,structure of foreign sources,types of foreign enterprises and investment methods of FDI in China are discussed comprehensively.In the part of mechanism analysis,firstly,the influence mechanism of OFDI on China's innovation capability is discussed.These mechanisms include learning feedback mechanism,market expansion mechanism,talent absorption and flow mechanism,innovation environment utilization mechanism,value chain embedding mechanism,market competition mechanism and R&D cost sharing mechanism.Secondly,it elaborates the mechanism of FDI to enhance our innovation ability,which includes learning diffusion mechanism,talent training flow mechanism,value chain embedding mechanism,market competition mechanism and R&D cost sharing mechanism.Finally,this paper introduces the human capital level,administrative efficiency,economic development level,marketization level,opening level,intellectual property protection level,technology gap and financial development level which affect the innovation effect of two-way FDI in China,and analyses in detail how these factors play a role in the process of enhancing innovation ability through international direct investment in China.In the empirical analysis part,first of all,drawing on the research ideas of C-H model and L-P model,the basic model and threshold regression model for investigating the innovation effect of two-way FDI in China are established,and the threshold regression model is briefly introduced.Secondly,the measurement indicators of each variable are determined,and the panel data of 30 provinces in China from 2003 to 2016 are selected to test the innovation effects of OFDI and FDI in China,and whether the innovation effects of two-way FDI will be affected by the level of human capital and administrative efficiency in China is examined,and then the regression results are given.Finally,combined with the theoretical analysis of the impact of two-way FDI on innovation ability and the reality of China's international direct investment,the empirical test regression results are analyzed.The results show that: China's OFDI promotes the improvement of domestic innovation capability;FDI does not effectively enhance China's innovation capability;the improvement of human capital level and administrative efficiency can significantly increase China's OFDI innovation effect,but has no significant impact on the development of China's FDI innovation effect;Domestic R&D capital investment can significantly enhance China's innovation ability,and play an important role in improving China's innovation ability.According to the conclusion of the study,the policy suggestions are given in terms of strengthening policy support,encouraging enterprises to better develop OFDI overseas,optimizing the investment environment,improving the quality and structure of FDI,improving the level of human capital and government service efficiency,expanding the scale of R&D investment,optimizing the structure of R&D investment and improving the competitiveness of enterprises themselves in the market.