Absorptive Capacity of OFDI Reverse Technology Spillover: An Empirical Analysis on Inter-provincial Panel Data in China

Reverse technology spillover of OFDI to technological progress of the home country is a relatively new topic in international economics and also one of the important expectations that the Chinese government launched the 'going out' strategy. This paper studies the absorptive capacity of reverse technology spillover effect of China's OFDI using inter-provincial panel data (2003 similar to 2008). We find that human capital significantly enhances the total factor productivity, but hardly increases levels of absorptive capacity of reverse spillover through an empirical analysis. In the end, the paper provides a reasonable explain for the result, suggests that it is essential to increase education investment, and proposes the corresponding policy recommendations for the implementation of China's 'going out' strategy on the basis of above conclusions.