Econometric analysis on FDI, spillover effects and innovation

This paper is to analyses the relationships among FDI (Foreign Direct investment), innovation and spillover effects by using panel data and econometric models. The results show that FDI can improve innovation. The main factors to affect innovation are proportion of R&D expenditures on FDI, and the rate of scientists and engineers on whole employees, but the current product activities have no significant relationship with innovation. Technological spillover can improve new product but restrain the improvement of human capital level. FDI has facilitated innovation and its spillover effects can also be helpful for new products, while hampering the increase of human capital.