An analysis of Financial Market and FDI Spillovers based on Absorptive capacity

The technology-absorbing capability of the host country can really affect the efficiency of spillovers from FDI. As one of the most important measures of its absorbing capability, the development level of the host country's financial market plays a crucial role in boosting the process of technological spillovers. This paper investigates the efficiency of FDI spillovers from the angle of the host country's absorbing capability-the development level of its financial market, drawing a conclusion that the development level of the financial market does affect the FDI spillovers-absorbing capability of the host country. Unfortunately, the contributions of the development of Chinese financial market to the absorbing capability are not so significant. So we have to enhance the overall efficiency of our financial market and create better financial environment for FDI spillovers.