Foreign direct investment, financial development, and technological innovation: a new perspective on spatial spillovers
DOI: https://doi.org/10.3846/tede.2026.25275Abstract
This study used data from cities in the Yangtze River Delta (YRD) in China between 2012 and 2022 to analyze how foreign direct investment (FDI) and financial development impact technological innovation and how these effects spread to nearby areas. We found that (1) FDI significantly boosted technological innovation, and financial development effectively strengthened this effect. (2) The YRD urban agglomeration exhibited clear spatial spillovers in technological innovation, in that geographically adjacent regions showed technological siphoning effects, whereas regions with similar economic development levels demonstrated positive spillovers. (3) The synergistic effects of FDI and financial development varied by region, with positive spillovers in economically linked regions but insignificant effects in geographically adjacent regions. The findings also suggested that late-developing regions exhibited stronger absorptive capacity for FDI technology spillovers. The YRD and Pearl River Delta regions exhibited significantly superior synergistic effects compared to the Beijing-Tianjin-Hebei and Chengdu-Chongqing regions. This study enriches the understanding of the relationship among FDI, financial development, and technological innovation along with their spatial heterogeneity. It also provides valuable innovative insights for formulating regionally differentiated innovation policies, thereby offering practical guidance for fostering coordinated technological innovation across regions.
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FDI, financial development, technological innovation, Yangtze River DeltaHow to Cite
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