A Research On The Path Of Economic Growth Affected From The Foreign Trade And FDI In Zhejiang Province

Whether the trade and foreign direct investment affectting economic growth is a hotresearch for scholars. Scholars at home and abroad have conducted researches on theissues by the theoretical and empirical methods. However, there is not a unifiedconclusion on the issues.The impact of foreign trade and foreign direct investment on economic growthshould be a specific analysis. Specific to the Zhejiang province, it is a more developedprovince in China, which has catched the opportunity of reform and opened up anopportunity to focus on the development of an open economy, and it has made greatachievements. The total economic output of Zhejiang province has rosed year after yearsince the reform and opening up. And the ratio of its GDP and national GDP is increasingyear by year too. What’s more, the foreign trade volume and foreign capital of Zhejianghave been steady improvement in the past three decades. Analyzing the status ofZhejiang’s foreign trade and FDI and exploring the impact on economic growth ofZhejiang’s foreign trade and FDI are important practical significance.Foreign Trade, FDI mainly through the accumulation of capital and technology topromote economic growth. Firstly, this paper will test whether the Foreign Trade and FDIpromote economic growth through the ways by the empirical analysis of the simpleregression, the VAR and the panel data analysis. Then, make a comparative analysis ofthe results. From the the external comparative perspective, foreign trade and foreigndirect investment both can promote Zhejiang’s economic growth by the capitalaccumulation. But making the specific analysis of the coefficient, the role of FDI oneconomic growth is greater than this role of foreign trade without joining the domesticinvestment, labor and other control variables. And the role of FDI is less than the foreigntrade after adding the control variables. From the technological advances pathway, thetrade of Zhejiang province can not have a positive impact on economic growth, whileFDI having a significant technology spillover effect. From the internal comparativeperspective, the impact on economic growth of the trade by the way of capital accumulation is greater than the way of technological advances. The impact on theeconomic growth of the trade structure, the way of capital accumulation is greater thanthe way of echnology gains before2002, but the impact of the latter is greater than theformer after2002. The impact on economic growth of the FDI through capitalaccumulation pathway is greater than the technology spillover effect. In addition, thehuman capital, market institutions, R&D and infrastructure can enhance the absorptivecapacity of the technology spillover in Zhejiang Province.Therefore, in the future development, Zhejiang Province should firstly takemeasures to improve the trade structure to promote the positive impact of trade oneconomic growth; Secondly, Zhejiang should enhance the introduction of FDI andimprove the structure of FDI; Finally, Zhejiang should focus on the technology spillovereffects of foreign-funded enterprises, and pay attention to the introduction and training ofthe personnel.