System Quality?Foreign Direct Investment And Technological Progress

According to the latest statistics from the National Bureau of Statistics,China's Foreign direct investment(FDI)ranks second in the world with US$131 billion,second only to the United States.Foreign direct investment is the long-term strategic implementation direction of China's economic policy.While Foreign direct investment has brought economic development,it has also promoted employment and taxation.The most important role of foreign direct investment is the technological spillover effect it brings,which has promoted China's technological progress.In 2017,expert surveys show that China's technological development level is about 68.4% of the United States as a whole,and it is about 6.6 years behind the United States.Therefore,there is still a lot of room for development of Foreign direct investment in China.The original intention of China to replace technology with the market has not yet been fully realized.At present,China's technological progress still needs more power.The imperfect institutional environment,the low quality of foreign direct investment,the scarcity of talent pool,the low intensity of R&D investment,and the low level of intellectual property protection have always been the main reasons for the large gap between China's technological level and developed countries.Among them,the quality of the system has a decisive force for the technology spillover effect of foreign direct investment.Therefore,a correct understanding of the influence of China's institutional quality and foreign direct investment on technological progress will help improve China's overall technical level,improve system quality,and promote foreign direct investment.Develop,optimize the structure of foreign capital,improve the foreign investment environment,and promote China's high-quality and high-level "introduction" strategic objectives.Based on the theory of foreign direct investment technology spillovers and the absorption capacity of host countries,this paper theoretically discusses the transmission mechanism of foreign direct investment and institutional quality that affects the technological progress of host countries and the adjustment relationship between institutional quality and FDI and technological progress.By measuring the total factor productivity of 30 provinces in China from 2008 to 2016 and using it as the explanatory variable,this paper constructs institutional quality indicators based on the market-based total index,and uses foreign direct investment as the core explanatory variable to introduce institutional quality and foreign business.The interaction items of direct investment,and select human capital,intellectual property protection level,R&D investment,import dependence and economic development level as the control variables of this paper.Subsequently,the fixed-effect model and the GMM model were used to study the quality of the system and the impact of foreign direct investment on technological progress in the sample and the three major regions of the East,Central and West.The results show that the overall system quality of China and the quality of the system in the eastern,central and western regions have a significant role in promoting technological progress.The quality of the system plays a positive role in regulating foreign direct investment and technological progress.When the quality of the system is improved,the increase in foreign direct investment has significantly promoted the improvement of the technical level of the host country.The sub-sample study found that both institutional quality and foreign direct investment promoted the technological level of the eastern,central and western regions of China,and promoted the most significant effects in the eastern and central regions,and the institutional quality of the eastern,central and western regions was positive for foreign direct investment and technological progress.Regulatory effect.In addition,empirical research has also found that factors such as human capital,R&D investment,economic development level,intellectual property protection level and import dependence also have an important impact on technological progress.The policy implications of this paper are as follows: First,from a holistic perspective,the use of good institutional quality to optimize the effect of attracting foreign investment and improving the quality of foreign investment in China,as well as its role in safeguarding the effectiveness of attracting foreign investment,promote technological progress.Second,from a regional perspective,we should optimize the regional construction of institutional quality,optimize the structure of foreign capital,improve the quality of foreign investment,and promote the coordinated development of the provinces.Third,cultivate advanced technical talents,improve the ability to identify,absorb and apply core technologies of enterprises,and promote the improvement of China's technological level.Fourth,increase R&D capital investment,and create an external environment that is conducive to the flow of core technologies,and further improve China's innovation efficiency.Fifth,improve the level of intellectual property protection,create a standardized market environment,improve China's international investment image,promote China's economic development,and promote technological progress.