Study On The Influence Of FDI On The Innovation Of Local Enterprises

As a burgeoning nation,China places great emphasis on utilizing foreign capital.China’s "bringing in" strategy has enabled its companies to acquire large amounts of funding and technology.Therefore,discussing the role of foreign direct investment(FDI)in promoting technological innovation within Chinese companies not only has practical guidance but also has significant implications.This thesis argues that the intellectual capital generated by FDI has not been fully utilized due to a variety of macro-policy issues,in addition to factors related to organizational capacity and cooperation.Drawing on existing literature on FDI spillovers,this thesis divides FDI spillovers into three categories based on their pathway and direction:technological spillovers,forward technological spillovers,and backward technological spillovers.Three different FDI channels are examined in relation to their impact on Chinese companies’ innovation capabilities.Using a fixed-effects model,this thesis also investigates the relationship between institutional support,FDI,and company innovation capabilities.Different types of FDI have varying effects on technological innovation in Chinese companies.Furthermore,the Chinese government’s regulatory system has different effects on FDI and company technological innovation.First,FDI’s technological spillovers have a restraining effect on enhancing Chinese companies’ independent innovation.This contradicts the belief that FDI’s technological development will inevitably drive company technological innovation.During the process of importing foreign technology,foreign investment may also squeeze domestic technology and development.Under institutional regulation,this spillover effect has been better realized.Second,FDI’s forward technological spillovers have a negative effect on the innovative development of Chinese companies,as upstream capital’s technology spillovers within the industry will inhibit their own development.Under the support of the national system,this contradiction is exacerbated.Third,FDI backward technological spillovers have a significant driving effect on the technological innovation of Chinese companies.Downstream enterprises in China utilize direct technology transfers and competitive stimulation to "force" domestic independent technological progress,thus promoting the autonomous research and development of Chinese companies situated at the top of the industry chain.However,the state’s institutional support has not had a good regulatory effect on backward technological spillovers.Based on the conclusions of this thesis,some recommendations are provided for attracting FDI and promoting China’s innovative development from the perspectives of companies and the government.From a national level,it is necessary to create a favorable business ecosystem for attracting foreign investment and strengthen institutional support.For Chinese local companies,it is important to approach FDI cautiously,comprehensively digest and absorb it,while not neglecting their own intrinsic technological innovation.