The FDI and Independent Innovation of Small Enterprise of Chinese Industry-based on the Empirical Analysis of Eastern China

This paper analyzes via panel data the impact of FDI (foreign direct investment) on independent innovation of Chinese small enterprise and comes to a conclusion that FDI in general does not significantly impact small enterprises in the industrial sector of China economy. FDIs from different origins vary greatly in terms of their spillover effect on the independent innovation of small businesses: The FDI from Hong Kong, Macao and Taiwan generally promotes the independent innovation significantly while FDI from other countries does not have remarkable influences on the R&D capabilities of. small enterprises. This phenomena is defined as "Hongkong-Macao-Taiwan Effect". On the contrary, the impact of FDI from Hong Kong, Macao and Taiwan on the independent innovation of Chinese large and medium sized industrial enterprises is insignificant while the FDI from other countries do have remarkable influences on the R&D capabilities of those large and medium sized industrial enterprises, this phenomena is defined as "Europe-America effect".