A Study On Growth Effects Of Regional Economic Integration And Mode Selection

Since midterm of 1980s the world has been experiencing a new wave of Regional Integration Agreement (RIAs). Enhancing regional economic cooperation, promoting the progress of regional economic integration, and putting forward national economic growth have become an important trend in the world economy.Facts have proven that effects of different regional integration organizations on members vary greatly. Some organizations promoted member countries'growth and some resulted in negative impact. Thus analysis on growth effects of regional integration and mode selection are of great theoretical significance.This paper mainly studies growth effects of regional integration and the impact of different regional integration mode with statistical analysis method and comparative analysis method. Then advance corresponding suggestions. Also this paper systematically analyses the mechanisms of regional integration affecting economic growth.This paper analyzes growth effects of regional integration from the following three perspectives:Firstly, using the panel data in the period 1990-2005 related to 106 countries, this paper analyses the impact of regional integration on economic, the impact of RIA partners'income levels on economic growth. Also this paper applies Gravity Model to analyze China's trade potential with ASEAN members within China-ASEAN FTA (Free Trade Area).Secondly, this paper classifies the RIA members into developed and developing countries group and analyzed the effects of economic growth of regional integration respectively. And then classifies regional economic integration into three models of regional integration: North-North, North-South and South-South and respectively as an example of European Union, NAFTA and ASEAN.Thirdly, this paper focuses on the short and long correlation between regional integration and economic growth with ADF test, cointegration, VECM, impulse response function and variance decomposition analysis based on VAR method.The main conclusions are as follows: First, regional integration promotes economic growth through welfare effects of trade creation and trade diversion, expansion of the national income conduction effect, raising the overall growth of world trade and expanding market scale, improving integration organization's overall trade position, etc.Second, RIA partners'income levels have exerted positive effects on home country growth. Regional integration not only exerts a direct impact on home country growth, but also affects growth through other channels such as the ratio of net inflow of foreign direct investment to GDP and the ratio of industrial products exports in total exports. As to the Gravity Model, the results show that there is still considerable potential for China in trade with ASEAN. As a trader partner to ASEAN and a member of China-ASEAN FTA has a statistically significant effect on the bilateral trade volume. Other things being equal, China-ASEAN FTA members tend to trade less with the non-member countries. China should actively push forward the construction of China-ASEAN FTA and explore appropriate modes of developing bilateral trade.Third, there are different effects between developed and developing countries participate in regional integration. The regional integration among developed countries has a positive impact on growth, and the impact of regional integration among developed and less developed countries is not clear. While developing countries participate in regional integration with developed countries, the impact on growth is more significant, but the impact of regional integration with less developed economies is uncertain. The effects of different type of agreements on home country growth are different: North-South and North-North agreements have significant growth effects; there is no clear answer for South-South agreements.Third, there is a long and stable correlation between them for both India and Mexico in the period 1981-2005. Furthermore, Mexico enjoys stronger growth effects of regional integration than India, for India participate more in South-South agreements rather than other types of regional integration, while Mexico participate in North-South agreements such as NAFTA, which has significant growth effects for member countries.Four, China should focus on Asia to establish its regional integration strategy and to build a free trade zone around China, to actively participate in the process of sub-regional and small regional economic integration. On the model of regional integration, China should actively participate in North-South regional integration and make great efforts to develop bilateral FTA to boost exports and expand the use of foreign investment and technology introduction.The main innovations are as follows:First, study the mechanisms of regional integration affecting economic growth. Second, improve the empirical method analyzing growth effects of regional integration. Use panel data methods in growth effects of the regional integration of economic of developed and developing countries. Compared with previous approach of using simple dummy variables to measure regional integration, this paper introduces two dummy variables and two regional integration indexed into economic growth model. Then this paper reaches general conclusions by comparing the growth effects of developed and developing countries.Third, enrich the research results of growth effects of regional integration. Various empirical methods and comprehensive analysis used in this paper can ensure the accuracy and stability and reliability of the empirical analysis conclusions. Then come to conclusions different with current research, compensating for the shortcomings of domestic studies on growth effects of regional integration.Four, study mode selection of regional integration, draw convincing conclusions for a country to develop regional integration strategy.This paper comprises nine chapters.Chapter 1 introduces purpose of selecting this topic and methodology of research.Chapter 2 reviews relative literatures on the relation between economic growth and regional integration from home and abroad, and gives summaries of them.Chapter 3 systematically analyses the mechanisms of regional integration affecting economic growth.Chapter 4 uses the panel data in the period 1990-2005 related to 106 countries, analyzing the impact of regional integration on economic, the impact of RIA partners'income levels on economic growth.Chapter 5 classifies the RIA members and analyzed the effects of economic growth of regional integration respectively.Chapter 6 focuses on the short and long correlation between regional integration and economic growth with ADF test, cointegration, VECM, impulse response function and variance decomposition analysis based on VAR method.Chapter 7 analyzes the status of China's participation in regional integration.On the basis of analyzing the characters and existing problem of China's participation in regional integration, Chapter 8 advances corresponding suggestions.Chapter 9 concludes with an overall summary.