The R&D spillovers study of foreign direct investment in Chinese manufacturing sector

Multinational enterprises (MNEs) are important in transmitting technology across national borders. Not only do they allow for transfer of technology within the firm, but it is also believed that they are important channels for international R&D spillovers as well. In China about 2/3 foreign direct investment (FDI) are poured into manufacturing industry. This paper analyzes empirically whether inward foreign direct investment (FDI) work as channels for international R&D spillovers in Chinese manufacturing industry. It utilizes firm-level as well as industry-level data in the analysis. It explores that different types of FDI (FDI from Hong Kong, Taiwan and Macau and FDI from western countries and Japan), different modes of FDI (green-field FDI and non-green-field FDI) and different motives of FDI (domestic-market-oriented FDI and export-oriented FDI)might lead to different effects on R&D spillovers to local firms. It also analyses the influence of different industrial characters (such as technological gap, scale gap) on the R&D spillovers of FDI. Finally the article provides relative policy suggestions on the basis of above analysis.