After exploring several scenarios of the technology spillovers
from FDI firms, we find some interesting results. First, the estimates confirms the recent finding
of Liu (2008) that an increase in FDI in the industry at the four-digit level reduces the short-term
productivity level but increases the long-term rate of productivity growth of domestic firms,
since the initial loss in productivity level can be offset by the increase in the rate of productivity
growth applicable to all future periods.