A Spatial Econometric Analysis of FDI and Innovation of Zhejiang Non-state-operated Scientific and Technological Enterprises

On the basis of current literature review, this paper puts forward the point to study the relation between FDI and technology innovation of the non-state-operated scientific and technological enterprises in the Zhejiang province from the view of Spatial Econometrics (SE). Drawn on the experience of Griliches' Knowledge Production Function (KPF), it constructs the updated KPF model. Under the frame of the updated KPF model, zone innovation output is of spatial correlation. According to the theory of spatial econometrics, it makes an empirical analysis for the effect of FDI, R&D expenditure and R&D personnel to technology innovation, taking the advantage of the Spatial Error Model (SEM). As a result, the spatial error coefficient lambda is 0.866, which goes through the significance test and indicates that there are obvious effects of zones innovation spatial spillover in the Zhejiang province. The coefficient of FDI and R&D expenditure is positive and goes through the significance test, which indicates their noticeable positively spatial diffusion (spillover) effect on the zone innovation output. But R&D personnel have an opposite effect, which indicates that the R&D efficiency is lower though the Full-time Equivalent (FTE) of R&D Personnel is larger. Therefore, the R&D expenditure with supporting policies should be increased successively at first. Secondly, it is necessary to optimize the soft environment for investment to attract FDI. Third, the quality of R&D personnel is vital, but not its quantity.