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The International Effects of China's Growth, Trade and Ecucation Booms

  • Richard G. Harris

    (Simon Fraser University)

  • Peter E. Robertson

    (UWA Business School, The University of Western Australia)

  • Jessica Y. Xu

    (The University of New South Wales)

China’s international trade flows have increased by 500% since 1992, far outstripping GDP growth. Likewise tertiary education enrollments have increased by 300%. We simulate these changes using a multi-sector growth model of the Chinese and USA economies. A decade of trade biased growth in China is found to have a large effect on the USA economy – raising GDP approximately 3-4.5 percentage points. We also show that the trade bias in China’s growth accounts for more than half of the observed growth in tertiary enrolments in China. In contrast neutral growth has practically no effect on USA incomes or China’s stock of skilled labour. Finally the simulations reveal that China’s education boom per se has practically no long run impact on the USA economy. The results thus indicate that the pattern of productivity growth in exports sectors, as might be caused by falling trade costs, has been critical in transmitting benefits of Chinese growth to the world economy. They also point to an important link between falling trade costs and human capital formation.

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File URL: http://www.business.uwa.edu.au/__data/assets/pdf_file/0011/837146/10-04_THE_INTERNATIONAL_EFFECTS_OF_CHINAS_GROWTH,_TRADE_AND_EDUCATION_BOOMS.pdf
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Paper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 10-04.

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Length: 57 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:uwa:wpaper:10-04
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  1. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Boston College Working Papers in Economics 593, Boston College Department of Economics.
  2. Knight, John & Li, Shi, 1996. "Educational Attainment and the Rural--Urban Divide in China," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(1), pages 83-117, February.
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  7. Wing Thye Woo, . "Chinese Economic Growth: Sources And Prospects," Department of Economics 96-08, California Davis - Department of Economics.
  8. Prema-chandra Athukorala, 2003. "Product Fragmentation and Trade Patterns in East Asia," Departmental Working Papers 2003-21, The Australian National University, Arndt-Corden Department of Economics.
  9. Alessia Amighini, 2004. "China in the international fragmentation of production: Evidence from the ICT industry," KITeS Working Papers 151, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jan 2004.
  10. Matthieu Bussière & Bernd Schnatz, 2009. "Evaluating China’s Integration in World Trade with a Gravity Model Based Benchmark," Open Economies Review, Springer, vol. 20(1), pages 85-111, February.
  11. Tyers, Rod & Yang, Yongzheng, 2000. "Capital-Skill Complementarity and Wage Outcomes Following Technical Change in a Global Model," Oxford Review of Economic Policy, Oxford University Press, vol. 16(3), pages 23-41, Autumn.
  12. Amiti, Mary & Freund, Caroline, 2008. "The anatomy of China's export growth," Policy Research Working Paper Series 4628, The World Bank.
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