Empirical Analysis On Guangdong's Terms Of Trade

With the development of economic globalization, foreign trade has become one of the most important factors in promoting a country's economic growth. The basic purpose of a country participating in international trade is to get trade benefit as much as possible by international exchange and terms of trade are a crucial indicator which estimates one country's benefits from it. Therefore,how to obtain most advantageous terms of trade and get foreign trade benefit as much as possible are deeply concerned by every government and academe in the intense international competition.Since the implementation of our reform and open policy, China's foreign trade has obtained huge development and played a more and more important role in international trade. As a major foreign trade province of China, Guangdong's terms of trade has great influence on China's. Therefore, in this paper, empirical analysis on Guangdong's terms of trade was performed and it's discussed that how to improve Guangdong's terms of trade and get maximum foreign trade benefits.Due to data imperfection of custom's statistical information, china's scholars generally obtained widely divergent result when they calculated the price index of china's terms of trade based on Paasche aggregative formula. Therefore, in this paper,"Chain based-constant based"two-step method would be introduced to calculate the price index of terms of trade. Firstly, every period's price index of import and export would be calculated with"Chain based"method based on Paasche aggregative formula compared with last period's. Secondly, the price index of import and export would be calculated with"constant based"method compared with the benchmark period. Then through the benchmark period's export price index divided by the import price index was the price index of terms of trade.In this paper, Guangdong's net barter terms of trade (NBTT) and income terms of trade (ITT) would be calculated from 1995 to 2006 by the application of"chain based-constant based"two-step method. The result showed that Guangdong's NBTT generally tended to decline. Compared with 1995, the NBTT of 2006 dropped nearly 22%. The trend of ITT rose apparently. Compared with 1995, the ITT of 2006 rose nearly 256%. But the export quantitative index rose by the greater percentage. Compared with 1995, the export quantitative index of 2006 rose 357%. In other words, Guangdong's export growth mainly relied on quantity expansion.This paper also carries on the empirical analysis of the main influencing factors on Guangdong's NBTT and puts forward feasible measures to improve Guangdong's terms of trade.