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Export-Led Development in China: Examining the Role of Exports in Driving Economic Growth

Hamberg, Wendla LU (2023) EOSK12 20231
Department of Economic History
Abstract
This research examines the relationship between Exports and GDP Growth as China transitioned from Import Substitution (IS) to Export Promotion (EP) as their strategy to industrialize. China has experienced remarkable economic growth over the years, becoming one of the world’s largest economies. A common claim is that China’s economic success is due to increased Exports. According to the Export-Led Growth (ELG) theory, Exports play a critical role in boosting economic growth. The research aims to test if the ELG-theory holds in China. To examine the relationship between Exports and GDP Growth, a Time Series Vector Autoregression (VAR) is performed, taking into account the effects of additional factors such as Foreign Direct Investment,... (More)
This research examines the relationship between Exports and GDP Growth as China transitioned from Import Substitution (IS) to Export Promotion (EP) as their strategy to industrialize. China has experienced remarkable economic growth over the years, becoming one of the world’s largest economies. A common claim is that China’s economic success is due to increased Exports. According to the Export-Led Growth (ELG) theory, Exports play a critical role in boosting economic growth. The research aims to test if the ELG-theory holds in China. To examine the relationship between Exports and GDP Growth, a Time Series Vector Autoregression (VAR) is performed, taking into account the effects of additional factors such as Foreign Direct Investment, Gross Fixed Capital Formation, Population Growth, and Imports. Further, a Granger Causality test is conducted to examine the causal effect between Exports and GDP Growth, and vice versa, to test the ELG-theory. The analysis is based on data from 1979 to 2019. The VAR results show that Exports and GDP Growth have a moderate positive relationship, however, there is no statistical significance in determining GDP Growth when controlling for additional factors’ impact. The causal relationship is proven to be asymmetrical, and Exports do not have a causal effect on GDP Growth, while the opposite test exhibits causality. This suggests that in the case of China, the ELG-theory may not hold, implying that other factors may have played a more prominent role in boosting China’s economic growth. (Less)
Please use this url to cite or link to this publication:
author
Hamberg, Wendla LU
supervisor
organization
alternative title
Understanding the Economic Impact of China’s Strategic Shift to Export Promotion and its Increased Exports Policy: A Comprehensive Time Series Analysis
course
EOSK12 20231
year
type
M2 - Bachelor Degree
subject
keywords
Industrialization, import substitution, export promotion, export-led growth theory, industrialization approaches, GDP growth, exports, foreign direct investment, gross fixed capital formation, population growth, imports, causality, statistical significance
language
English
id
9129585
date added to LUP
2023-08-30 08:03:44
date last changed
2023-08-30 08:03:44
@misc{9129585,
  abstract     = {{This research examines the relationship between Exports and GDP Growth as China transitioned from Import Substitution (IS) to Export Promotion (EP) as their strategy to industrialize. China has experienced remarkable economic growth over the years, becoming one of the world’s largest economies. A common claim is that China’s economic success is due to increased Exports. According to the Export-Led Growth (ELG) theory, Exports play a critical role in boosting economic growth. The research aims to test if the ELG-theory holds in China. To examine the relationship between Exports and GDP Growth, a Time Series Vector Autoregression (VAR) is performed, taking into account the effects of additional factors such as Foreign Direct Investment, Gross Fixed Capital Formation, Population Growth, and Imports. Further, a Granger Causality test is conducted to examine the causal effect between Exports and GDP Growth, and vice versa, to test the ELG-theory. The analysis is based on data from 1979 to 2019. The VAR results show that Exports and GDP Growth have a moderate positive relationship, however, there is no statistical significance in determining GDP Growth when controlling for additional factors’ impact. The causal relationship is proven to be asymmetrical, and Exports do not have a causal effect on GDP Growth, while the opposite test exhibits causality. This suggests that in the case of China, the ELG-theory may not hold, implying that other factors may have played a more prominent role in boosting China’s economic growth.}},
  author       = {{Hamberg, Wendla}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Export-Led Development in China: Examining the Role of Exports in Driving Economic Growth}},
  year         = {{2023}},
}