Research on Absorptive Capacity and Reverse Technology Spillover Effects of China's FDI

Reverse technology spillover effects of FDI on the home country's technological progress is a relatively new topic in the international economics research, and also one of the important expectation that Chinese government launched the "going out" strategy. This paper studies short-term and long-term reverse technology spillover effects of China's FDI and the impact of absorptive capacity, using the inter-provincial panel data from 2003 to 2007 in China. It shows that China's FDI has significant short-term reverse technology spillover effects on the applications of total patents and invention and utility model patents, but only has significant long-term reverse spillover effects on the application of designs patents. In addition, the interaction between absorptive capacity and outward FDI stock promote domestic technological progress, and absorptive capacity impacts the long-term reverse technology spillover of China's FDI.