Abstract: By applying the systematic generalized moment method for dynamic panel data, this paper tries to test the impact of FDI spillover on the factor reallocations of China’s manufacturing industry from 2000 to 2009. The results show that the horizontal, forward and backward spillovers of FDI have a significant positive impact on the comprehensive factor reallocation effect in the manufacturing industry. After decomposing, it can be seen that all the three types of spillovers have significant positive influence on the factor reallocation effect of the enterprises in position. But only the backward spillovers have significant positive impact over the entering effects, and only the horizontal spillovers have significant positive impact on the exiting effect. Further study also finds out that the forward spillovers have significant positive influence only on the entering effect of enterprises in capital-intensive industries, and the backward spillovers have significant positive impact only on the exiting effect of labor-intensive enterprises.

Key words: FDI; spillover effect; factor reallocation; generalized moment method