I find evidence that the effect of FDI spillovers on the long-term rate of productivity
growth of domestic firms is positively associated with the level of human capital of domestic firms. Specifically, an increase in human capital only leads to greater intra-industry (or
horizontal) knowledge spillovers, but it has no effect on vertical spillovers.
Finally, we examine whether the spillovers associated with FDI diminish with the
physical distance between domestic and FDI firms. We construct separate measures for FDI
within and outside of the province in which a domestic firm is located. Our estimation results
suggest that, while FDI spillovers may occur across provinces, the intensity of spillovers reduces
with distance. This may imply that FDI spillovers are local in scope.