A Research On The Impact Of China’s Trade Openness On The Economic Growth

Trade openness and economic growth are always the the key research areas where economists never get tired of and they have formed a complete theoretical system and research methods and got an unanimous conclusion.However,he study on the impact of trade openness on economic growth has not got an unanimous conclusion.Since China’s reform and opening,foreign trade and economic growth have got a huge improvement.Clearly there is a close link between them.Based on the study of the impact of trade openness on economic growth,this article’s purpose is to find their inner mechanism.This paper first reviews related theories of trade openness and economic growth, and makes a combing and analysis of the internal mechanism how trade openness influences economic growth. And then,this paper gives a descriptive analysis on the macro performance of trade openness and economic growth of China from 1980 to 2013.Finally,this paper constructs a panel data model for analyzing the relationship between trade openness degree and economic growth under the framework of the new growth theory.While the international trade dependence ratio is regarded as the measure of trade openness and the problem of endogeneity of the explanatory variables is well solved by GMM estimation of dynamic panel data,this paper selecting the panel data from 2001 to 2012 including 30 provinces of China makes a empirical analysis.The research demonstrates that trade openness plays a role in promoting economic growth and there is an inverted U-shaped relationship between them.Except individual provinces,the trade openness level is still low in most provinces,and has not yet reached a critical point.Labor and capital investment is still a major factor in promoting economic growth in the provinces while the impact of human capital on economic growth is not significant.Comparing with different regions,the effect of trade openness on economic growth in different regions varies greatly,and trade openness contributes most to economic growth in the eastern region and the same as human capital.