An Empirical Investigation Of The Causal Relationship Between Exports And Economic Growth In China

The influences of exports on economic growth has been the focus of economic research .The relation of trade and economic growth is important aspects of economic strategy. However, whether in theory or empirical research,economic scholars have not reached a consensus.Since the Reform and opening up, China's economic growth and exports have made great achievements.China has grown into the world's second largest economy and the world's largest foreign exchange reserves.The growth of our economy and foreign trade provide a rich case study for economic scholars .China scholars reached export promotion of economic growth with a lot of analysis tools, but have not reached a consensus too.This paper argues that it is need to research on this problem further .Based on previous studies, this paper combines academic analysis together with empirical investigation,and probe into two subjects of trade and growth: whether exports promote economic growth in China the mechanism how trade affects growth.This paper sort out the theory of economic growth first,and then summarizes the mechanism about how export promote economic growth as the theoretical basis of this analysis.Then take the exports and GDP in 1978-2008 as the sample data to analysis of the relationship between the two variables.First, take unit root test for the time series data,then establish stable VAR model after the data directly and analysis of the optimal lag order.and then take the Granger causality test.After determining the causal relationship between the two .take exported as explanatory variables, GDP as explanatory variables.And then using E-G to examine cointegration between variables.On the basis of error correction model.with this basis of error correction model,we can analysis short-term fluctuations of export impact on GDP.Finally, we have the conclusion: China's exports stimulate economic growth.Finally, based on the empirical conclusions, this paper proposed policy about how to improve China's export.