The proxies for measuring the sector import share and vertical spillovers of imports from
foreign firms generally follow that of Blalock and Veloso (2007), but we go further in that we
extend the forward linkage and add a time trend to analyze the rate effect of import-intensive
inputs from foreign enterprises on the productivity growth of domestic firms. The introduction of
the time trend and its interaction terms enables to investigate the rate effect of vertical linkages
of imports as controlling the horizontal and vertical spillovers in the presence of FDI. The
estimated results allow the analysis of the level and rate effects of foreign imports in downstream
and upstream sectors. In other words, our estimation is focused on changes in firm productivity
associated with the changes in downstream and upstream imports.