Abstract: By building the local knowledge spillover model, this article introduces the effects of neighbor enterprises of local areas into the total factor productivity evolution equation of the enterprise-the Tobit-II regression equation. Based on the manufacturing enterprise data (2000-2007), this empirical analysis finds that:(1) the neighbor enterprises at the county, city and province levels have significantly positive spillover effects on the total factor productivity evolution of the observed enterprises; (2) the neighbor enterprises at the county level have the largest spillover effect, the neighbor enterprises spillover effect at the city level is the second, while at the province level the neighbor enterprise spillover effect is the weakest and the most unstable; (3) more communication opportunities among the neighbor enterprises can encourage local productivity spillovers; (4) the higher ratio of the neighbor enterprises in the same industry would promote local productivity spillover effect; (5) the source of regional productivity spillover mainly comes from the neighbor with high efficiency, while the influence of the neighbor enterprises with low efficiency is negative.

Key words: Local Knowledge Spillovers, Total Factor Productivity, Manufacturing Enterprises