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Empirical analysis on the effect of economic opening on China's economic growth

Author

Listed:
  • ZHANG Weifu

    (School of International Business & Economics, Nanjing University of Finance & Economics, Nanjing 210046, China)

  • ZHU Zhigang

    (School of International Business & Economics, Nanjing University of Finance & Economics, Nanjing 210046, China)

Abstract

Based on an adjusted Solow economic growth model, using econometric tools such as cointegration test and Granger causality test, taking the economic factors such as foreign trade and foreign investment into account, this paper makes regression analysis on the effect of economic opening on China's economic growth by using the data from 1985 to 2004. The analysis indicates that the domestic capital input is still the primary element that promotes China's economic growth, by contrast, the effect of foreign trade and foreign investment is faint. It is a bidirectional causality between foreign trade and economic growth, and the adjusting velocity of trade is larger than the foreign direct investment on the balance of the China's long-time economic growth.

Suggested Citation

  • ZHANG Weifu & ZHU Zhigang, 2007. "Empirical analysis on the effect of economic opening on China's economic growth," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 2(4), pages 623-643, December.
    • Handle: RePEc:fec:journl:v:2:y:2007:i:4:p:623-643
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    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0032-y
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    More about this item

    Keywords

    foreign trade; FDI; economic growth; Granger causality test;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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