The Experience Analysis Of The Impact Of Foreigh Trade On Economic Growth In Laos

Since the past two decades have witnessed the significant performance of both Laos'foreign trade and economic growth,especially Laos'entry into ASEAN,the study of the relationship between Laos'foreign trade and economic growth becomes an important issue for the academic research. But the relationship between the foreign trade and economic growth is complex and has different performance in different nations and areas, based on this situation, this thesis attempts to utilize the growth theory to explore how foreign trade promotes Laos'economic growth. This thesis is divided into seven chapters. (1) The author discussed the research background, methods and guideline and the innovative points of the thesis. (2) The author takes a retrospect of research literature of the studies on the relationship between foreign trade and economic growth. Then the author reviewed the economic growth theories and the theories of foreign trade propelling economic growth. (3) Based on the theories, the thesis analyzed the mechanism of the function of foreign trade to promote economic growth, especially the influence of export on the growth. Here, considering the impact or causation of human capital accumulation and technological progress on economic growth. Also, the author explained an over-reliance on foreign trade will expose the entire economy to more risks and affect stable and sustainable economic development. (4) The quantitative analysis of volume, structure, direction of Laos'foreign trade after economic reform has been made. In addition, the author discussed about Laos'economic development strategy, the policy of the foreign trade after the economic reform and ASEAN accession, pointed out the existing policy and administrative measures towards foreign trade of Laos, such as the new tax policy, import and export control, trade cooperation policy. (5) On the basis of the analytical results of the previous sections, the author further examined the impact of foreign trade on Laos'economic growth. Advanced econometric methods of time series analysis, such as co-integration test, Granger causality test and error correction model, have been adopted to analyze the impact of total trade, export, import and its structure on Laos'economic growth. (6) The author calculated four indices of the openness in Laos, and then we set up a model basing on the Cobb-Douglas function, to carry out a regression analysis focusing on the impacts of various indices on Laos'economic growth. The empirical results show that all four openness indices match expectations. Based on a multi-country general equilibrium model of trade that incorporates bilateral"ice-berg"trade costs, we employ the Revised Gravity Model to measure the bilateral trade costs between Laos and major trading partners. The result illustrates that among five major trading partners, only with two countries that Laos'bilateral trade costs are under 50 percent in 2008. This is fully shows that Laos'trade openness is still low. (7)The thesis pointed out the existing problem in the area of Laos'foreign trade, and gave some suggestions on how foreign trade can accelerate Laos'economic growth.