THE IMPACT OF OFDI REVERSE TECHNOLOGY SPILLOVER ON CHINA'S TECHNOLOGICAL PROGRESS: ANALYSIS OF PROVINCIAL PANEL DATA
THE IMPACT OF OFDI REVERSE TECHNOLOGY SPILLOVER ON CHINA'S TECHNOLOGICAL PROGRESS: ANALYSIS OF PROVINCIAL PANEL DATA

Summary/Abstract: In recent years, China's foreign direct investment (OFDI) has grown rapidly. While promoting economic development of a host country, it also has a certain impact on technological progress of a home country through the reverse technology spillover effect. However, the source of China’s OFDI is not unevenly distributed, and OFDI of the Eastern coastal economically developed provinces and cities has the highest proportion. At the same time, due to large differences in economic development levels and technical levels of various provinces and cities, the absorption effect of OFDI reverse technology spillovers must be different. This paper takes the patent grant amount as a technical indicator and uses panel data on various provinces and cities in China to empirically test the reverse spillover effect of OFDI on China's technological progress and regional differences in it. Overall, there is a long-term stable equilibrium relationship observed between China's OFDI and domestic technological progress, but the correlation coefficient is not high. In terms of regions, the largest value is observed on the East, the second largest - on the West, and the smallest - in the Central region. The proportion of China's OFDI participating in foreign production and technology research and development is still relatively low, so the coefficient of influence on technological progress is not high. The government should actively guide and promote Chinese enterprises to increase foreign investment in production, research and development, and thus increase the contribution of OFDI to technological progress.

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