Abstract:By considering the “bad” output, we used Malmquist-Luenberger index to estimate the total factor productivity, and then studied the non-linear relationship between technological progress and FDI on the basis of the panel smooth transition model. The result has shown that there is a nonlinear relationship between technological progress and FDI at the early stages of economic development. The technology gap between our country and investing countries is too large, the so-called "FDI technology spillover effect" does not appear, and FDI is not good to technological progress. With the gradual development of the economy, the negative effect of FDI on technological progress weakens, then turns positive, and the "FDI technology spillover effect" emerges when the economy develops to the threshold value. In addition, there is a threshold effect of human capital and financial development. Human capital has a negative effect on technological progress in the early time period, and then it becomes positive with the development of the economy. Fnancial development has a positive effect on technological progress in the early time period, and then, it becomes negative with the development of the economy.