The Analysis about Spillover Effect of FDI in China——Based on the Separation of Horizontal Linkage Effect and Vertical Linkage Effect

With the reform and opening to the world,our country has become one of the largest countries that absorb FDI.The inflowing of FDI has brought much-needed capital,new technologies,marketing techniques and management skills for our country.While all of these potential benefits of FDI become very important,particular emphasis is placed on the contribution of FDI to increasing productivity and competitiveness of the domestic industry.This paper applies econometric analysis to argue that the inflowing of FDI has spill effect to the firms through backward linkage.However,there are both spill effect and competitive effect to the firms through horizontal linkage and forward linkage.