An Analysis on Technology Spillover Effect of Foreign Direct Investment and Its Countermeasures

Due to the reform and opening-up policy, China has become one of the most attractive recipients of FDI, attributing a lot to the economic boom in the last three decades. The inflow of foreign investment has not only brought a package of capital, management expertise and production technology but also significantly spurred industrial development through technology spillover. Such a diffusion effect can impose beneficial influence on domestic economy through various channels: forward and backward linkages, demonstration or imitation effect and mobility of human resources. But since the occurrence of technology spillover is also conditional and restricted by many factors, it is meaningful to understand what these constraints are, and propose correspondent approaches to facilitate better utilization of FDI and technology spillover effect, both for domestic enterprises and macro-economic operations.