Sixth, we derive interesting insights when the proxy of human capital is added to t he
models. In particular, domestic firms accumulating more human capital will benefit from the long-term productivity growth in the same industry. Large domestic firms may also be willing to pay high wages to attract more skilled workers. Thus, they are likely to achieve greater productivity improvement. Specifically, the estimates show that the increase in accumulating human capital of domestic firms has no significant impact on vertical spillovers from FDI.