A Study On The Relationship Of International Trade And Regional Economics Growth

The relationship between international trade and economic development has been in-depth researched, but mainly are empirical analyses of time series data of the entire country. This paper will apply panel data methods to study the relationship between international trade and regional economic development.The paper first reviews the theory about relationship between foreign trade and economic development. The paper uses the multiply theory of Cairns and points of inner technology of New Classic Theory to separate the different influence channels, and then analyze the reasons of supply and the demand of international trade which influences the development of region economy. In the short-term, international trade promotes economic development through expanding domestic demand. In the long-term, the import and export through the promotion of long-term technological advances promote economic growth. The paper establishes the empirical models about the relationship between international trade and regional economic growth, based on the new classical theory of economic growth. And then based on China's eastern, central and western provincial data, the paper uses panel data unit root test, cointegration test and error correction model to analysis the short-term and long-term relationship. The paper will independently study the relationship between import, export trade and economic growth.The results show that the respective relationships between the eastern, central and western foreign trade and economic growth have obvious differences. In the eastern region, relationship between import, export trade and economic growth is not only a significant and long-term equilibrium one, but also a short-term causal one. In the central region, import, export trade and economic growth have one-way causal relationship, that is, export trade guides long-term economic growth, but no significant short-term causal relationship. In the western region, foreign trade and economic growth do not have long-term causal relationship. And the contributions of the development of foreign trade to economic growth have regional differences, and of the flexibility of foreign trade growth to economic growth in the eastern region are higher than those in the central and western regions. The flexibility of export growth to economics growth is higher than import.This paper demonstrates the following main innovations. First, the paper studies the relationships among export, import and the eastern, central and western economic growth in the short and long-term applying panel data cointegration analysis, unit root test and error correction model. Second, the paper systematically compares the relations between the development of foreign trade and the economics growth of the eastern, central and western regions. The conclusion of the study shows that there are significant differences between the foreign trade development and regional economic growth.