Research On Functional Mechanisms Of Foreign Trade Promoting China's Economy Growth

Since reforming and opening up, our country's economy grows rapidly in the total scale and in the foreign trade. The foreign trade has a more and more obvious impact on our country's economy, and presently it has become a very important content and a basic component of our country's construction. Under the new circumstances of china's entering into WTO and the world economy's integration, it is of great significance to understand the relationship between our country's foreign trade and economy growth, to search the functional mechanisms between them, and to measure the contribution of foreign trade to economy growth. All of them will help to improve our country's foreign trade structure and strengthen the effect of foreign trade on economy growth.First, this paper reviews the related literature home and abroad, then it concretely analyzes the functional mechanisms of foreign trade promoting economy growth, based on these, this paper uses econometrical method to test the determinant factors of our country's economy growth. This paper uses the production function of Robert and Sala-I-Martin to construct an equation concerning the output and the factors which need test. Using our country's related data to regress this equation, we find the factors which determine our country's economy. In order to test whether foreign trade promotes our country's economy growth through these factors, this paper uses coordination theory, error correct model, variance decomposition, etc. to conduct separate tests on the mechanisms of our country's import and export promoting economy growth.The results of the tests indicate: in our country, the main factors influencing economy growth are technology progress, system transition, domestic capital, FDI and human capital, and they all have positive effects on our country's economy. The import promotes our country's economy growth mainly through technology progress, system transition and domestic capital, and the import of industry finished products has a bigger effect on economy growth than that of primary products import. The export effects our country's economy growth mainly through technology progress, system transition, domestic capital and FDI, and the effect of the primary products export on our country's economy growth is greater than that of the finished products export. But with our country's foreign trade structure adjustment and industry upgrading, the technology content and added value of the finished products for export increase continually, we believe that the finished products export will improve our country's economy growth more intensively.At last, this paper gives an explanation of the reasons for the test results, and in order to strengthen foreign trade's effect on our country's economy growth, this paper, in combination with the characteristics of our country's economy and foreign trade, puts forward several policies and suggestions correspondingly at the same time.