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Export and Economic Growth in China: A Demand-Oriented Analysis.doc
Export and Economic Growth in China: A Demand-Oriented Analysis
Export and Economic Growth in China:
A Demand-Oriented Analysis
Justin Yifu Lin Yongjun Li
No. December5, 2002
Abstract: Many studies, based on the accounting identify of gross domestic product (GDP), found that the contribution of foreign trade to China’s economic growth over the past 20 years was very small. In this paper, we re-examine the issue and find that those studies underestimate the contribution of exports to GDP growth by overlooking the indirect impacts of exports on domestic consumption, investment, government expenditures and imports. We propose a new estimation method and find that a ten percent increase in exports resulted in a one percent increase in GDP in the 1990s in China, when both direct and indirect contributions are considered.
Key words: Economic growth, International trade, Export, Growth Accounting
Export and Economic Growth in China: A Demand-Oriented Analysis
Justin Yifu Lin
Peking University and Hong Kong University of Science and Technology
And
Yongjun Li
Peking University
Abstract: Many studies, based on the accounting identify of gross domestic product (GDP), found that the contribution of foreign trade to China’s economic growth over the past 20 years was very small. In this paper, we re-examine the issue and find that those studies underestimate the contribution of exports to GDP growth by overlooking the indirect impacts of exports on domestic consumption, investment, government expenditures and imports. We propose a new estimation method and find that a ten percent increase in exports resulted in a one percent increase in GDP in the 1990s in China, when both direct and indirect contributions are considered.
Key words: Economic growth, International trade, Export, Growth Accounting
Since China’sinitiation of the economic reforms and the adoption of its open door policy, foreign trade in China has experienced rapid growth. In 1978, the total
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