Empirical Study On The Relationship Between Foreign Trade And Economic Growth Of Shandong Province

The relationship between foreign trade and economic growth has becoming a hot research field these years. There is not yet a unified conclusion neither in the normative field, nor the empirical field. Because of the difference in the models, assumptions, the objects, the conclusion will be different. Therefore, we can not identify the implementation of foreign trade will certainly promote the economic growth simply. It must be situation-specific analyzed.Let us come to the actual situation in Shandong Province. There is no doubt that not only the economy in Shandong Province is strong, but also the foreign trade. Since reforming and opening, the total economic output of Shandong Province reached a new high score. The share of GDP is increasing year by year. Meanwhile, the foreign trade has developed rapidly, with the degree of dependence on foreign trade also unceasingly rising.There are two main ways that the effect foreign trade brings to economic growth: capital accumulation and technological progress. This article makes an empirical research in the perspective of capital accumulation. Employing VAR models Co-integration, Granger causality test and impulse response function, this paper empirically analyzes relations of economic growth and foreign trade, which includes two aspects of quality and quantity. The conclusions are got from the above discussion in this paper as following: the quality of trade is not the granger causality of the economic growth, and the quantity of trade is the granger causality of the economic growth. Therefore, we should adjust the structure of trade objectively, in order to increase the proportion of manufactured goods in exports and increase the proportion of primary products in imports, instead of pursuing the expansion of trade.