Relaxing the hypothesis of un-correlation between inputs and TFP, this paper subtracts the unobservable and idiosyncratic TFP from regression residual, and using panel data of 36 indus- tries from 2001-2006, to estimate the production equation with Levinsohn-Petrin＇ s non-parametric theory. The results show the growth of TFP improves, but share of its contribution to output growth is low. And it also shows there is increasing return to scale in industry. From view of technology spillover, the paper finds that effects of backward technology spi...
