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The Effects of China's Growth in Manufacturing Sector in the U.S. Economy

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  • Saleh Ghavidel

    (Department of Economics, Firoozkooh Branch, Islamic Azad University, Firoozkooh, Iran.)

  • Mohammad Dehini

    (Department of Economics, Firoozkooh Branch, Islamic Azad University, Firoozkooh, Iran.)

Abstract

This paper investigates the gain of bilateral trade between China and U.S. in manufacturing sectors when both countries play a role in asymmetric (biased) growth of international trade. Our model includes a special case of Biased Growth Theory in international trade. We collected labor productivity, export and import data by using classification of manufacturing industries, for U.S. and China in 1993, 1998, 2002 and 2006. The results according to Cost-Benefit analysis and econometric model indicated that the China's manufacturing sector is Import-Biased Growth and U.S. manufacturing sector is Export-Biased Growth. Therefore, The Terms of Trade between U.S. and China in manufacturing sector has been changed in favor of China. Keywords : Biased Growth, China-U.S. Trade, Labor Productivity, Manufacturing Industries, Terms of Trade.

Suggested Citation

  • Saleh Ghavidel & Mohammad Dehini, 2017. "The Effects of China's Growth in Manufacturing Sector in the U.S. Economy," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(1), pages 1-20, Winter.
    • Handle: RePEc:eut:journl:v:21:y:2017:i:1:p:1
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