The threshold effect of financial pressure on the interaction between technological progress and foreign direct investment under the new normal of economy

Abstract

The Chinese "pressure type" finance under the new normal of economy has a significant impact on local technological progress and FDI. Based on the panel data of 30 provincial levels in China from 2011 to 2020, this paper empirically examines the action mechanism and transmission mechanism of financial pressure on technological progress and FDI. The results show that there is a two-way Granger causality relationship between patent ownership, government investment in science and technology and investment of science and technology personnel and foreign direct investment in technological progress, and the technology market transaction leads to the Granger causality of actual use of FDI. The further threshold effect test shows that there is a single two-way threshold effect between technology market trading and foreign direct investment, there is no threshold effect between patent ownership and foreign direct investment, but there is a single threshold effect between government S&T investment and S&T personnel investment on foreign direct investment. Based on the above conclusions, the paper puts forward the suggestions that the local government should play a hard role in both technological progress and FDI introduction, and strengthen the guiding role of regional finance in technological progress and the attracting role of FDI.