A Study On The Relationship Between Trade And Economic Growth From The Perspective Of History

The correlation between international trade and economic growth, both in theoretical and empirical analysis, is an eternal topic. During the modern economic growth in the world’s major powers, especially the rapid economic growth of China since the reform and opening up, foreign trade plays an important role. But in recent years, especially since China has become the largest trading nation, its external environment has changed dramatically, while the potential growth path of China is also into the downstream channel. Whether foreign trade can continue to be an important factor in economic growth of China has caused controversy.On the other hand, the relationship between trade and economic growth both in theoretical research and empirical analysis, there has been different opinions and conclusions. This paper attempts, from the perspective of history and through a lot of data and empirical analysis, to verify the relationship between the development of the world’s major economic powers in trade and economic growth.Firstly, this paper classify the opinions about interactions between trade and economic growth, as well as primary factors, via literature analysis. Then, it reach the establishment of analytical models about the mechanism of trade and economic growth as well as the effects of different trade practices based on welfare gains and losses under typical situations by mainstream trade theory. Due to the current situations of a country has.connections with its long-term economic and trade development, empirical analysis with recent decades is difficult to profile the interaction mechanism between the two sides deeply and this paper utilizes long-term modern historical empirical data, alternatively.The empirical analysis of the correlation between trade and economic growth of China in the modern history is divied into five phases, the mid-Qing Dynasty, the late-Qing Dynasty, the Republic of China, the People’s Republic of China before and after its opening and reform. During the mid-Qing Dynasty, trade and economic growth has little connection while trade play a "stabilizer" role in some extent only in a certain period; in late-Qing Dynasty, despite the significant increase in trade, but in terms of static effects have a negative effect on economic growth; in the period of the Republic of China, the correlation between trade and economic growth is significant, and the correlation coefficient of imports and exports climbs high, but the trade has a negative effect on the economy; the People’s Republic of China, before its opening and reform, relies on traditional agricultural product for the base, gains static interests from trade, also the the dynamic interests gradually revealed; after China’s opening and reform, trade in goods and trade in services demonstrate different effects on economic growth, the former is positive and the latter is negative. The net exports of goods is still the primary engine to increase GDP, but from the perspective of improving GDP per capita, the opposite effect. Now, China has paced into the phase with smooth interactive among trade in goods import, export and GDP. China should pay attention to the simultaneous development of imports and exports.Several laws can be concluded among four primary industrialized economic and trade powers, the United Kingdom, the United States, Germany and Japan, during the last few centuries. At the industrialization startup phase, the industrial production acts as the engine of rapid development of trade, trade and economic growth will interactive smoothly. During high trade barriers, trade war or even wars, the industrial advantage cannot totally transfer into trade advantage, the the smooth interactive between trade and economic growth will be interrupted, however the positive role of imports for the period of economic growth cannot be ignored. In addition, if government over intervention the economy or exists large amount of domestic monopolies controlling of the national economy, whether in peace or war, despite the industrial production can continue act as the engine of economic growth, but the positive interaction between trade and economic growth can be hardly achieved. In addition, although the colonial economy can realize rapid exogenous as well as even endogenous economic growth via trade, but it easily incur retaliation from other countries. The cost of protecting the colony and quelling the independence movement could drive colony into economic disintegration. Overall, without other adverse factors, the trade and economic growth are mutually driven. Despite the current Chinese economic growth and trade relations have maintained a positive interaction, also achieve a rapid accumulation of capital and technology via manufacture industry. But, trade friction, insufficient domestic demand, rising labor and logistics costs will impact of China’s trade and economics sustainable growth. Experience and lessons can be learned from the United Kingdom, the United States, Germany and Japan’s modern historical performance.The first chapter of this paper, mainly through literature analysis, category primary viewpoints about the relationship between trade and economic growth, as well as the influence of main factors on the relationship between the two. By theoretical analysis, the second chapter analysis the mechanism of trade and economic growth, and then build the model to make preliminary judgment for the change of the relationship between trade and economic growth under changed influence factors. The third chapter make an empirical analysis about the correlation between China’s trade and economic growth in nearly 300 years, divided into five phases. To determine whether China is a specific case or a universal case, via approximate methods in the third chapter, the forth chapter continue profiling the performance of the relationships between trade and economic about the United Kingdom, the United States, Germany and Japan in modern history. Combining the theoretical analysis results of the second chapter and following two chapter’s empirical analysis, the fifth chapter principal viewpoint of this article, and establish a few inspirations of the relationship between trade and economic growth about the world and China, accordingly.