Abstract This paper divides two kinds of vertical spillovers of FDI through the total intermediate inputs into four kinds of vertical spillovers by using the noncompetitive inputoutput tables, and considers the dynamic changes of the inputoutput efficiency. Then we study the spillovers of FDI in Chinas manufacturing industry. It shows that only the forward spillover via the intermediate imports offered by foreign firms can promote the technical progress, thus promote TFP. However, the impacts of horizontal spillover, the forward spillover via domestic inputs offered by foreign firms and the backward spillover via domestic inputs consumed by foreign firms on technological progress are negative, and all kinds of spillovers seem to have a trend of reducing the technical efficiency, though not statistically significant.
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Received: 01 September 2010
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