Export Growth And Trade Promotion In Economic Development Of China

Export, no doubt is considered as one of the most important aspects for economic development. In this context, many researchers had already presented their ideas for export and economic development defined by openness, productivity, technology, exchange rate, population, etc. For trade development, each and every country is also focusing on different trade promotion programs, but there are very few studies, which consider trade promotion as key factor of export growth.The aims of this dissertation were to (1) To analyze the impact of trade promotion as important trade policy,(2) To analyze the effectiveness of trade promotion programs conducted at state level,(3) To explore the underlying determinants of participation in trade promotion programs, and (4) To better understand international trade policy.The rationale for trade promotion is based on the observation of market failures and the idea of creating positive externalities. And trade promotion programs are designed to overcome those barriers including information about foreign consumers. To increase export various factors play an important role in macro and micro level. Among them trade promotion which comprises a large set of policy instruments is effective in increasing export.This study is divided into6sections where Chapter1is the introduction chapter and it defines the research problem using published literature to investigate the objective of the research by looking at types of government trade promotion organization and their programs, their structure and how they influence export.Chapter2presents the theoretical background for the study. This chapter connects the international trade theory to the economic development and its determinants affecting trade.Chapter3and4examines how far the theories discussed in chapter2links up with policies and practices of trade promotion. It also discusses trade promotion organization and the tools they are using for the trade promotion. This chapter creates the framework for hypothesis creation in relation to trade policies and promotion.Chapter5examines the impact of trade promotion programs organized by the China Council for Promotion of International Trade (CCPIT). On the basis of the treatment effect model, this chapter investigates whether trade promotion is an important factor in enhancing exports of the country.Chapter6compares the finding of the study with the studies in international context. The findings will be followed by the recommendation made for the policy implication for trade development. The direction for future research is suggested at end of the chapter.Further, the empirical analysis of the study is divided into two sections1st Impact of Trade promotion in state level export and2nd effectives of state level trade promotion programs using treatment effect model and panel data regression analysis.Impact of Trade promotion in state level export: The empirical study on China's trade promotion shows that the macroeconomic characteristics of China and the destination country along with trade promotion activities have significance relationships with export which leads to the increase in exports of China in developed destination countries. But in least developed countries participating in trade promotion activities is not an important factor for incremental export. Findings, with the treatment effect model strongly indicates that trade promotion activities are effective for the export of the country with1.36%increment in state level export. Adaption of trade promotion program varies in different countries with different levels of economic development, political relations, cultural similarity, and geographical proximity. This study sates some of the important country characteristics of destination country to influence the trade promotion participation and concludes those participation are highly affected by the population and logistic performance index of destination country and distance between the countries.Trade promotion and its effectiveness: Although there is ambiguity in the literature, research indicates that state promotional activities can be fruitful under a variety of conditions, depending on the activities undertaken. This study empirically analyzes the trade promotion measures or programs namely; foreign offices, trade fair participation, and training programs conducted by CCPIT whether if they are effective to increase the state level export. This study proves that all these three programs are positively associated with exports but, another trade promotion measure FTA, shows no significance with the direct state level export. This study supports bundled trade promotion activities combining OFF, TFP, TP and FTA to be an integral accompaniment throughout export process increasing state level export by approximately12%.On the recommendation side, Trade Promotion should be considered as an important policy measure to export development, given the impact of participation in different trade promotion programs around the world results an increment export of the country. Findings of this study somehow might help the trade policy implication. Firstly, trade promotion programs should be a logical mix of coherent policies and policy formulating bodies. There is no single policy that can define and lead to implementation of promotional activities. In a similar way, implementation of promotional activities should be the responsibility of a mixture of institutions, with each one playing a specialized role.This study provides some useful insights of trade promotion measures but findings should be treated as tentative unless verified in other contexts. There are a number of empirical limitations to this study. First, the study is a test of the aggregate effects of state government trade promotion activities targeting incremental state level export. It suffers from the usual shortcomings of aggregate tests and secondary data analysis. Second, this study focuses only data for3years2008,2009and2010. So, the time factor effects of these programs remain unexplored. Third, although it is noted at aggregate state level trade promotion tools, further it may be focused specifying different sector of industry. Also this study is limited by the selection of explanatory variables in terms of export and international trade promotion participation. It only focuses on limited macroeconomic factors of a destination and exporting country.