Abstract: Industrial horizontal division can improve the accurate and careful post setting and optimize the factors combination between the processing and manufacturing sector and the professional scientific research institutions. Based on the Acemoglu vertical integration and technology model, this paper makes use of the dynamic industrial panel data from seven input-output surveys conducted in China to make an empirical analysis. The results indicate that the forward horizontal division of the processing and manufactoring sector can increase the quantity of material and technological factors by relying on purchasing the technological innovation factors from professional scientific research institutions, while their independent innovation capability will be weakened. The backward horizontal division will lead to increased investment on independent research and development and depend on themselves to carry out technological innovation, so as to realize the industry-university-research cooperation.

Key words: horizontal division; technological innovation; input-output