Technological Spillover of FDI Within Industry Sectors

Based on the panel data of a sample of 36 industry sectors during 1995-1997 and 2000-2003, this paper estimates the technological spillover effect of FDI(Foreign Direct Investment) to domestic industry firms with fix effect model and random effect model. The empirical study shows that: (1) in 1995-1997, technological spillovers are insignificantly positive; the technology gap and the sector characteristic of capital-intensive restrict the spillover effect of foreign direct investment; and (2) in 2000-2003, technological spillovers are significantly positive, the domestic firms in capital-intensive sectors and with bigger technology gap achieve higher spillover effect than those in labor-intensive and with less technology gap ones. This paper also analyzes the policy implications of the results.