Opening Up And Regional Economic Growth: A Comparative Analysis Between Two Coastal Provinces

Opening up strategy has made substantial contribution to China's economic growth, especially to those of coastland provincial regions in recent three decades. Based on previous research, this paper examines the outcomes of opening up strategy in both Zhejiang and Shandong provinces, and has them compared under the concern of the relationship between opening up and regional economic growth. Furthermore, this paper analyzes the different characteristics of these two provinces' foreign trade and foreign direct investment (FDI), which is the main contents of opening up, then discusses the reasons behind.In this paper, firstly we make a comparison for the 30 years' data of opening up between Zhejiang and Shandong. Then we conduct Mechanism analysis through Technology Spillover mechanism, Capital Accumulation mechanism, as well as Spatial Agglomeration mechanism, which belongs to New Economic Geography (NEG), the frontier of International Economics in recent years. After that, we carry out empirical tests, using Johansen Co-integration test, Error Correction model, Impulse Response analysis and Variance Decomposition analysis.The test results show that there's a long-term equilibrium relationship between opening up and economic growth of Zhejiang and Shandong, and opening up promotes the economic growth of these two provinces. But in the long run, the role in promoting Zhejiang's economy of foreign trade is greater than Shandong, yet the role in promoting of FDI to Shandong's economy is larger than Zhejiang. What's more, there's also a difference in the relevance between foreign trade and FDI in the two provinces: Zhejiang's foreign trade has promoted the introduction of FDI; the introduction of FDI in Shandong promotes the development of foreign trade. Based on the analysis, the corresponding policy recommendations are made for pushing forward opening up and regional economic growth of Zhejiang and Shandong.