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Argumentative Essay On Export And Economic Growth

Paper type: Essay
Pages: 11 (2666 words)
Categories: Essay
Downloads: 5
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Rui and Jain (2007) conducted the analysis of the factors behind the economic growth of China. The researchers conducted an empirical analysis using the Panel data Model and found that the economic growth of China in term of GDP growth has witnesses strong effects from changes occurred in the patterns of fixed assets investment, gross domestic exports and macroeconomic policies.

The study further pointed out that exports of the country act as the driving force behind the economic growth of China and the GDP of country is positively related with the exports (Rui and Jain, p353, 2007) Zuliu Hu and Khan (1997) review the economic scenario of China and disclosed that after the state control over the productive assets in 1978, there were some major economic reforms implemented in China that includes the measures the liberalize the economy, encouragement to the private business and facilitating the export related activities.

As a result of these measures there is significant improvement observed in the economic growth of the country.

The figures show that before the year 1978 the annual growth rate of the country was 6 percent a year whereas after the economic reforms of 1978, the annual growth rate accelerated and reached at nine percent per year that very soon touched the level of 13 percent.

In order to identify the main player behind the economic development of China Zuliu Hu and Khan (1997) prepared report for IMF and pointed out that there are many factors responsible for the economic development of China like the work force efficiency, capital assets stock etc but an important contribution to this economic growth is made by the productivity gains that have the share of almost 42 percent in the economic growth of the country. During the year 1979-94 there was 3. 9 percent increment in the productivity of the country that led to rise in the exports of the country as well.

The economic liberalization reforms resulted in foreign investments that boosted the exports of the country and this strong export growth fueled the productivity growth that is the most important factor behind the economic growth of the country. In this way the research came up with the conclusion that there are strong links between the export growth and the economic growth in China and the annual growth rate rise of China after 1978 witnessed clear impacts of trade liberalization that open the doors of foreign investment and gave boom to the exports.

Qing and Bruce (2001) conducted a research study to investigate the link between economic growth of country and export. The researchers conducted a national study and analyze the data from 1986 to 1999 using the Error Connection Modeling ERM technique. The results of the study disclosed that in three major provinces of china there are clear indications of links between economic growth and exports. Moreover the FDI also accounts for the rise in exports that is shown from the results of the study. Andy and Kwan (1999) also conducted a research study so that the relationship between china economic growth and the export could be studied.

The researchers employed the Granger’s test as the main research methodology and analyzed the country data for the time period 1952-85. It is found from the research that there is casual relationship between the export sector of the country and the national income per capital. The study also shows that the growth of one sector has led to the growth in another sector as well. It is also revealed from the analysis of data that when the government implemented the economic reforms in china, there are clear changed observed in the growth of the export sector of the country due to trade liberalization measures and rise in the foreign investment.

This is the time when the economic growth of the country also took speed and the per capita national income of the country went on increasing. Thus it is found that the researchers prove the links between the export growth and the economic growth of the country in term of per capita national income. (Andy and Kwan, p105, 1999) LI Jianchin et al (2005) revealed that the links between the export and the economic growth are present in the economic growth patterns of china however it is also a fact that there are certain multiple factors that have strong impact on this relationship.

The provincial level data of the country is sued in the research so that the link between the exports and economic growth could be found and the factors related with these two variables could also be studied. The Vector Error Correction Model – VECM is used for the testing of the research question and it is found that the casual links between the economic growth and the export are present in the provincial level data of China and different channels of exports have a significant role played in the economic development of the country.

Grosman and Helpman (1990) pointed out that in the recent year the economy of china has gone throw a phase of transition as it has moved from the centrally planned economy towards the market economy. At present the regional dualistic development pattern is one of the important attribute of the Chinese economy and at the same time the structural changes occurring in the Chinese economy are also having strong impacts on the economic development of the country. As a result of these changes china has become one of the largest developing countries of the world.

The changes in the economic structure of China well supported the fact that the growth of the export sector has positive relationship with the economic growth of the country and this relationship is also tested through many of the studies of the social scientist during the last few years. The results of most of the research studies make it clear that during the last two decades there have been major developments in the export sector of the country and due to trade openness the export sector has grown very rapidly in the country.

The open policy of the government of china adopted from the last two decade has a direct and positive effect on the export expansion in China and during this time period the economic development is also accelerated. Thus there are some evidences that show that the expansion of the export sector of china has contributed towards the economic development of the country.

Thirlwall (1999) pointed out that the economic reforms taken by the government in China has led to the development of totally different economic structure of the country and as a result of these economic reforms the present economic scenario of the country is quite different from what it was some decades ago. This changes economic scenario has also influence on the relationship between the export growth and the economic development of the country because the economic structure shapes the development pattern for a country either it would be a mature market economy or a newly industrialized country.

Thus it could be implies that the relationship between the economic growth and export is very strong in China but at the same time it is also a fact that there are certain factors that possess the capability to change and influence this relationship and any major structural change in the economic structure of the country will destabilize the relationship between the export growth and the economic development of the country.

Lardy and Nicholas (1995) pointed out that the relationship between the exports and the economic development of a country may exists but at the same time it is also a fact that in different regions and in different sectors this relationship works in quite different manner . Due to which it is not possible to pass an overall judgment over the relationship related with the link of exports and economic growth. The growth may accelerate the pace of the economic development in one country but it is not necessary that the same patterns and level of export sector growth contributed in the same way to the economic development of another country.

This is because along with the exports there are certain other things that matter most in determining the pace of the economic growth and there are many important variables that work to define the relationship between the exports and the economic growth thus it is a fact that when the overall economic structure of a country is supportive for the development and the export sector also work well then there is possibility that the country will witness positive links between the export growth and the economic development.

(Lardy and Nicholas, p1065, 1995) Li and Leung (1994) pointed out that the degree of openness means the trade liberalization and the economic structure that supports the domestic entrepreneur is usually different in different countries due to which the patterns of exports and economic growth are also different in these countries.

The exports of a country hugely depend upon the productive capacity of a country as well as on the foreign investments because when the country is efficient in production certain goods and the foreign investment also back this production, then the country can easily fulfill the domestic needs and then export the remaining good to the different countries. Due to the foreign investment the domestic entrepreneurs use to develop fast because they get the opportunity to produce more for meeting the demands of the foreign investors.

Thus it is a fact that these conditions work in different manner in different regions. When the government is supportive to the foreign investment, the export sector grows and ultimately the country is benefited inform of economic growth. While taking China as an example, it is very interesting to find the links of exports with the economic growth in this country because the economy of China took a turn after the government implemented the economic reforms in the country after 1978.

These reforms result in trade openness and FDI rise due to which the export sector grew and at the same time the economy also flourished. Thus China is a great example of an economy where the export growth is found very supportive to the economic growth and at the same time it is also a fact that the other related economic conditions are were also aligned with the economic development requirements due to which the positive link between exports and the economic development in China is established.

If the government of China keep the policy of restricting FDI and also bound the economic structure then despite the export growth, it would not be possible for the country to accelerate the economic growth. Finally it is concluded in the research that the export growth backed by the sound economic structure has positive relationship with the economic growth in China (Li and Leung, p1189, 1994) Lie, et al (1997) conducted a research study to find out the main factors behind the fast economic growth of China.

The research study disclosed that in the last quarter of the twentieth century, major changes occurred in the economic structure of the country. An important reason behind the economic growth of the country after the 1970s was pointed out by the researchers as the agricultural reforms implemented by the government that was followed by the large scale industrialization in the country through the reforms in the urban industrial sector.

It is also found that the driving force behind the economic growth of the country is the change in the economic policy that took the economy of China from import substitution and self reliance to export promotion and openness. These are the major changes in the economic policy of the country that contributed towards the rapid development of the economic sector of the country.

The export sector of the country was strengthen by the government and there were many export promotion policies were implemented with radical reforms that contributed towards the liberalization of the Chinese markets for the foreign investors, FDI encouragement and an important step was the industrial restructuring that bring many competitive advantages of Chinese economy at the level of international trade. All of these steps were taken by the government to restructure the economy and to support the economic development. An important outcome of these steps is the growth of the export sector after 1970s.

After this time the economy of China also take a boost and at present the world is surprisingly witnessing the rapid developments occurring in the economic sector of China. Thus it is found that the strength of the export sector is an important force that accelerate the growth of the Chinese economy but it is also important to notice that the export is not the only force behind the economic growth of the country but certain other factors like FDI, industrialization and economy restructuring are the important factors that support well the economy of China during the last two to three decades.

Finally it is concluded by the researchers that the export sector strength has close relationship with the economic growth of china but the export sector can not do any thing alone of there should be no support of the other economic factors like FDI, industrial development and trade liberalization (Lie, et al, p1679, 1997)

Hence the above review of the literature threw the light on the relationship between the export and the economic development while taking China as an example. It is revealed from the above review of the research studies that the relationship between the exports and economic growth is an important point of concern for the economic experts and the social scientists. There are many empirical researches conducted in order to find out the evidences about this relationship.

There are many of the researches that disclosed the findings that the export have positive and strong relationship with the economic development but at the same time there are many researchers having the belief that the export work for the acceleration of the economic development of a country only when it is well supported by different other factors like FDI, trade liberalization, capital stock, industrial structure etc.

It is also revealed from the above researches that in different countries and region, this relationship works in different manner. China being one of the fastest developing countries of the world is focused by many social scientists to find the link between the exports and economic growth in this country. It is found from the review of related researches that china export sector supports well the economic growth of the country and after the trade liberalization when the export sector grew; the economic growth was also flourished.

Thus China is an important example of the country where the export growth has contributed significantly towards the economic development however some of the researchers also believe that in China also the other factors support these two economic variables due to which a positive relationship between them is established

References

Alaei Far (2002), “The Relationship between Export and Economic Growth: assessing the evidence from Iran (1959-1999), Institute for International Energy Studies (I. I. E. S)

AndyC. C. Kwan John A. Cotsomics, exports and growth in china, International Economic Journal, Korean International Economic Association, 5 (1991), pp105-117 Arnade. C and U. Vasavada (1999), “Causality between productivity and exports in agriculture: Evidence from Asia and Latin America”. Journal of Agricultural Economics 46:174-186 Balassa B. 1985. Exports, policy choices, and economic growth in developing countries after the 1973 oil shock. Journal of Development Economics 18: 23-35 Grosman, G. and E.

Helpman, (1990), “Comparative advantage and long-run growth”, American Economic Review 80(4): 796-815 Haishun Sun, Ashok Parikh (2000), Exports, Inward Foreign Direct Investment (FDI) and Regional Economic Growth in China, Taylor and Francis Journals Regional Studies, 35 (2001), pp187-196 Kavoussi, R. M. (1984), Export expansion and economic growth: Further empirical evidence. Journal of Development Economics 14: 241-250 Kraf, J and A. Kraft (1978), On Relationship between Energy and GNP, Journal of Energy and Development, 3, pp 401-403

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Argumentative Essay On Export And Economic Growth. (2020, Jun 02). Retrieved from https://studymoose.com/export-and-economic-growth-2-new-essay

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