The technology progress effects of outward foreign direct investment: Evidence from China

OFDI (outward foreign direct investment) is an important channel of international technology diffusion and has positive effects on motherland´s technology progress. The latest researches reveal that OFDI can generate reverse technology spillover effect. Based on the theoretical and empirical studies, this paper uses the data from 1985 to 2010 and tests the reverse technology spillover effect. We find that OFDI has a weak positive effect on China´s TFP (total factor productivity). Based on the heterogenous host countries of OFDI, this paper respectively discusses the OFDI to the OECD memberships and non-memberships. The conclusion is that investment in the OECD memberships will produce much more reverse technology spillover effects than that in the non-memberships. From the above analysis, this paper puts forward some suggestions in order to make full use of OFDI for the economic development of China.