An Empirical Study On Trade Openness, Technological Innovation Capability And Economic Growth In China

The relationship between openness and economic growth has been a wide concern but controversial research topic. On the one hand, the promoting effect of trade openness on economic growth is confirmed by implementation of trade liberalization and export-oriented strategy in newly-industrialized countries. On the other hand, many empirical literature also supports the positive effect of on trade openness economic growth. Since 30 years of the reform and opening-up China's rapid economic growth seems to some extent also confirmed this view. However, some scholars question the decisive role of trade openness on economic growth.They believe that trade openness alone does not necessarily lead to economic growth, or only a temporary prosperity, the key is that the impact of mechanism of trade openness on economic growth is conducive to generate sustained economic growth effects. Many scholars analysed the impact of mechanisms of trade openness on economic growth from different point of view, such as trade openness promoting the economies of scale, optimizing the allocation factors, improving the rate of domestic investment, and facilitating capital formation. The endogenous growth theory suggests that technological innovation is fundamental driving force for a country's long-term economic growth, and based on this, this article explores the mechanism of the trade openness on China's economic growth from the perspective of technological innovation capability. Many scholars pointed out that trade liberalization not only directly spured technological progress through the high-tech capital goods imports, technology trade, and but also indirectly promoted the technological innovation capability of host countries through competition effect, demonstration and imitation effect, linkage effect and so on, thereby promoting their economic growth. However, some other scholars have argued that technological innovation had a self-accumulation and path-dependent characteristics, and excessive reliance on technology spillover brought about by trade liberalization output may only bring short-term effects or short-term prosperity, while weakening the country's technological innovation capability, and not forming a mechanism to promote long-term economic growth.On this basis of literature review, the article followed the fundamental principle of scientificity, systematization and feasibility, screened out index to evaluate technology innovation capability, utilized fatorial analytical method to determinate the dominating element influencing technological innovation capability and the proportional coefficient of index, and correspondingly established a model to estimate China'technological innovation capability. Based on this, This paper used the time series data from 1991 to 2008 to analyze the the long-run equilibrium and dynamic relationships between trade openness, technology innovation capability and China'economic growth by employing the ADF tset, cointegration analysis, Granger test, impulse response measurement and other analysis methods. The results indicated that trade openness on economic growth in China had a short-term output effects, but no significant effect of long-term growth. in the long run, technological innovation capability was an important source of China's economic growth and the fundamental driving force; however, the promoting of trade openness on China's technology innovation capability was less, which meaned that the mechanism that trade openness promotes long-term growth of China's economic by upgrading the technological innovation capacity affects economic growth had not formed yet.On the above basis, this thesis finally revealed the main conclusions, and put forward some suggestions, so as to make trade openness serve China's economic development better.