The Spillover Effect of Foreign Direct Investment on China’s High-Tech Industry Based on Interprovincial Panel Data

• Published in: Sustainability 2024-02, Vol.16 (4), p.1660
• Main Authors: Zhao, Min, Chen, Qing, Dai, Debao, Fan, Yaodong, Xie, Jiaping
• Format: Article
• Language: English
• Subjects: Absorptive capacity; Analysis; Cooperation; Developing countries; Economic development; Economic growth; Foreign investment; Foreign investments; High technology industry; Host country; Innovations; LDCs; Manufacturing; Productivity; Sustainable development
• ISSN: 2071-1050; 2071-1050
• DOI: 10.3390/su16041660

Since its reform and opening-up, the scale of China’s utilization of foreign direct investment (FDI) has been expanding. Meanwhile, the “Belt and Road” initiative has opened up broader markets and trade opportunities for China. As a pillar industry supported by the state, the high-tech industry has also become an industry with more foreign investment. Therefore, based on the data of China’s high-tech industry from 2012 to 2021, this paper analyzes the technology spillover effect of foreign direct investment on the high-tech industry in the whole country as well as in the east, west, and northeast regions by using the C-D production function. The results show that in the eastern region, FDI has a positive spillover effect on the output and technological innovation of the high-tech industry; compared with the eastern region, FDI in the central and western regions inhibits technological innovation but has a positive effect on the output of the high-tech industry; in the northeastern region, FDI hampers the output of the high-tech industry but promotes the enhancement of the technological innovation capacity. The reason for this is that FDI is unevenly distributed in each region of China, and the absorption capacity of high-tech enterprises in each region is different from that of foreign direct investment. Finally, against the background of “Belt and Road”, this paper puts forward policy suggestions in light of the actual development situation of each region. China should strengthen the supervision of FDI to ensure the sustainability of foreign investment. All regions should give full play to their comparative advantages and deal with the balanced development of FDI and local factor inputs to realize the coordinated development of China’s regional economy.