The empirical results support the argument of Liu (2008). Without differentiating the level from
the rate effects of FDI spillovers, the estimated spillovers effect is often negative, especially
when dataset used covers a short time span. This dissertation aims to extend Liu’s work (Liu,
2008) further by estimating the FDI effects separately for high-tech and low-tech industries. Our
goal is to determine whether the positive rate effect of horizontal spillovers is driven by FDI
spillovers in the low-tech or high-tech industries.