Technology Spillover Effect of FDI on Manufacturing Industry: Empirical Study from the Perspective of Industry Heterogeneity

Abstract

In the past 40 years, China has been continuously reforming and opening up. At the same time, foreign direct investment (FDI) has become an "accelerator" for China's economic growth. A two-sector model has been constructed on the basis of the C-D production function, and the panel data of 24 sub-sectors of China's manufacturing industry from 2000 - 2017 has been used for empirical testing. The results showed that FDI has significant technology spillover effects on China’s manufacturing industry. Even if three groups which are labor-intensive, capital-intensive and technology-intensive have been tested separately, the technology spillover effects of FDI are still significant. However, there are significant differences in the coefficient values. After further testing, there are influences on the technology spillover effect which comes from the intensity of domestic R&D expenditure and the proportion of FDI, and the latter is more obvious.