Research on the Influence of FDI on China’s Economic Innovation Development

Abstract

Foreign direct investment (FDI) and outward foreign direct investment (OFDI) are the primary methods through which capital moves internationally. They serve as significant conduits for technological spillover, which is vital for the progress of countries and regions. Through the combined impact of the growth in foreign direct investment and the two-way flow of FDI, China may enhance its access to various production resources, including labor, capital, and energy. Additionally, this enables China to improve the distribution of intangible assets such as knowledge and technology. Consequently, there is an urgent need to establish and implement a strategy that prioritizes innovation-driven development.This study utilizes China’s provincial panel data from 2000-2020 to examine the relationship between the expansion of foreign direct investment (FDI) and the level of innovation. The regional innovation index is used as the dependent variable, while the FDI scale is used as the independent variable. Additionally, a model is employed to test the impact of China’s FDI scale expansion on regional innovation capacity. Simultaneously, this study takes into account the disparities in development between the eastern region and the central and western regions, as well as the influence of the Pilot Free Trade Zone policy. Consequently, the sample is further categorized into the eastern region, central region, and western region for a more detailed analysis. Relevant countermeasures are provided based on the results of the empirical analysis mentioned above.