Abstract: According to R&D-intensity of host country, Chinese OFDI flows to developed countries that are R&D-intensive and to transition and developing economies that are R&D-extensive. This paper constructs a theoretical mechanism and model of the country difference of Chinese OFDI and technological progress, and also conducts an empirical analysis based on the China’s inter-provincial panel data from 2003 to 2012 and the approach of IVFE. The results show that the country difference of Chinese OFDI has significantly different effects on technological progress. China can acquire the reserve technology spillover from developed countries, but not the transition and developing countries. In contrast, China produces positive technology output to them. The total amount of the reserve technology spillover from developed countries is digested and absorbed by the human capital. The total amount of positive technology output to transition and developing countries is partly shared and recovered by home R&D cost.

Key words: R&, D Cost Sharing