Overflow Effect of Foreign Direct Investment Metrological Study Based on Relevant Data from Industrial Sectors
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Abstract: In this essay, econometrics is adopted to conduct preliminary analyses on overflow effect of foreign direct investment on all walks of life in Chinese industrial sectors from 2001 to 2002, proving that direct foreign investment in China has produced prominent overflow effect in Chinese industrial sectors and that such effect protrudes and stands out in industries where considerable gap exists between domestic enterprises and foreign enterprises. We propose that, in this circumstance, emphasis should be laid in the field of foreign capital on how to further improve technological level of foreign enterprises.
Keywords: foreign direct investment, overflow effect, gap in technological level
Chapter I Rationale
As transnational companies grow fast and international investment expands rapidly from all over the world, effect of FDI (foreign direct investment) on host country's economy, in particular overflow effect on industrial technology of host countries, has captured considerable attention from theoretical circle and government authorities. Overflow effect of FDI has long been expected by countries adopting a policy of opening to outside world expect, especially developing countries. FDI overflow effect on host countries shall be deemed an important channel to acquire leading science and management technology from a transnational corporation. However, exemplary study on different countries shows that overflow effect put out by FDI considerably different from country to country, and that some negative overflow effect has even resulted. What is overflow effect of foreign investment in China? It is of great significance for us to study this question to work out a proper policy in foreign investment. It is for this purpose that a preliminary probe is conducted on overflow effect of foreign investment based on relevant data released by Chinese industrial sectors.
Chapter II Literature Review
Overflow effect of foreign investment means indirect effect of unconscious effect by foreign investment on economic effect and economic growth or development capacity of a host country (HE Jie, 2000)...