The Long-term Impact Of International Trade On Regional Economic Growth

As one of the key driving forces of a country’s economic growth,international trade has an important impact on the domestic spatial economic structure.Since the reform and opening up,China’s domestic regional economic gap has widened as the gradual deepening participation in economic globalization.How to give overall consideration to high-quality opening-up and regional coordinated development has become an important issue in China’s economic development.While the impact of international trade on regional economic growth has been widely discussed by economists from home and abroad,most studies focused on trade geographical location or opening policy,paid little attention to the important impact of historical factors,and failed to investigate how international trade affects the long-term economic spatial evolution based on rich historical experience.In fact,the unbalanced regional economic growth is an important phenomenon throughout China’s modern history,which is closely related to the export growth during 1910s-1930s.This dissertation explores the long-term impact of modern China’s export on domestic regional economic growth and its mechanism,and discusses the role of domestic transportation infrastructure and place-based policy in this impact according to China’s national conditions.Firstly,based on the theoretical framework of Eaton&Kortum(2002),this dissertation constructs a spatial economic model including treaty port institution,external economies of scale and trade infrastructure to explore the impact of export on long-term regional economic growth.The simulation results show that the export growth caused by trade cost declining or foreign demand increasing could promote the growth of relative real income and labor agglomeration in the domestic treaty area,and expand the regional economic gap;This impact can be enhanced by external economies of scale and the relative advantage of treaty area’s trade infrastructure;When the above two mechanisms are significant enough,the treaty area can continuously attract labor agglomeration and so as to further expand the regional economic gap even if the treaty port institution is weakened in the long run.In addition,the reduction of domestic trade costs could alleviate the unbalanced regional economic growth by reducing the obstacles for non-treaty areas to participate in export trade.The above theoretical analysis lays a foundation for the empirical research of this dissertation.Second,this dissertation empirically explores the long-term impact of modern China’s export trade on domestic regional economic growth and its mechanism by using modern China’s port trade data and population data.We construct the continuous "export access"index to describe the market potential of export in the modern time,and use "long difference"as the main identify strategy.The empirical study finds that modern China’s export access significantly promoted long-term regional population growth,the extent of this impact showed a U-shape trend over time,and was enhanced since the 1980s.The above findings remain robust after we exploit the opening time and spatial location of modern China’s treaty ports to construct instrumental variables for export access,and take a variety of robustness tests for the level of economic agglomeration,competitive hypothesis and the impact of subsequent historical events.Furthermore,the mechanism analysis shows that external economies of scale and historical sunk investment might be two important channels through which modern export promoted long-term regional economic growth.Thirdly,this dissertation further introduces modern China’s railway transportation network information,and empirically explores the comprehensive impact of international trade and domestic transportation infrastructure on the long-term regional economic growth.The empirical study finds that both modern China’s export and railway construction have significantly promoted the long-term regional population growth.Railway construction could marginally weaken the-term impact of modern export and alleviates the unbalanced regional economic growth caused by the latter.this effect is relatively strong in areas closer to historical ports or areas which were connected to railroads earlier.The above findings remain stable in Ⅳ estimation and several robustness checks.This dissertation further analysis the mechanisms from micro perspectives and finds that railway construction could marginally weaken the long-term impact of modern export by influencing domestic enterprises’ export decision and labor migration decision.Fourth,considering that the government has also played an important role in China’s regional economic growth,this dissertation empirically explores the comprehensive impact of international trade and place-based policy on China’s long-term regional economic growth from the perspectives of "economic agglomeration" and "per-capita output" based on the historical experience of the "Third-Front Construction" policy.The empirical study finds that both modern China’s export and the Third Front Construction have significantly promoted the growth of population density and real per-capita GDP of China’s Third-Front Area in the long run.Furthermore,there is a substitution relationship between modern export and the place-based policy while promoting population density growth,and a complementary relationship while promoting real per capita GDP growth.The above findings remain stable in Ⅳ estimation and several robustness checks.The Mechanism analyses find that modern China’s export and the Third Front Construction could form substitution effect on economic agglomeration by promoting industrialization,and form complementary effect on per-capita output through "matching" and "learning" effects which led to economies of density.Overall,this study verifies the long-term stability of the spatial effect of international trade,reveals the important historical reasons for China’s long-term unbalanced regional economic growth,and provides policy references for contemporary China to implement both high-quality opening-up and regional coordinated development.