Foreign R&D investments' spillover effect - An empirical study on Chinese high technology industry

Foreign R&D investment has increased rapidly in China in recent years, triggering a widespread attention in academic circles at home and abroad. The focus of discussion is the effect on host country when foreign R&D capital is transferred. However, current analysis still stays on logistic level-Jacking standard empirical analysis. This paper innovatively puts foreign R&D investment variables. and local enterprises' innovation capability into experience model, then, regresses based on 13 high technology industries' panel data. The test result shows that foreign R&D investment can help local enterprises enhance innovation capability, but the effect is not as strong as the enterprises' own R&D investment; the high market share of foreign enterprises would promotes the forming of "Squeeze-out Effect" on local enterprises innovation. On the basis of test result, this paper puts forward a number of specific policies and suggestions.