Reverse Technology Spillover from Outward FDI: The Case of China

One of the main purposes of Chinese "going out" strategy is to get the access to overseas advanced technology and enhance Chinese firm's technological innovation capability, As an integral part of "going out" strategy, outward foreign direct investment (FDI) can facilitate technology spillover into home country through R&D resources sharing mechanism, one-way technology communication mechanism, and overseas market competition mechanism. This paper conducts an empirical study on the relationship between the outcome of patent and outward FDI, using the data from 1985 to 2007. It gives a conclusion that outward FDI is significantly and positively relative to Chinese patent application and patent licensing, which indicates the existence of reverse technology spillover from outward FDI.