Foreign Trade And The Economic Growth Disparity Of Chinese Regions: Mechanism Analysis And Empirical Study

China's regional economic growth disparity has received much attention. Previous studies focus on the evolution law, composition and underlying forces of the regional economic growth disparity. However the forgone studies mentioned much about some factors such as policies, geography position, capital investment, and etc, but paid little attention to foreign trade. There are not many studies on the theme of foreign trade and China's regional economic growth disparity, and they focus on the overall effect but the mechanism. China's fast economic growth in the recent twenty years relies heavily on the opening up, especially international trade. Along side with the imbalanced regional economic growth, regional trade development is uneven. In particular, there is much difference between the East and the Midwest with the respect of trade scale and trade mode. Furthermore, the expansion of Chinese regional economic growth disparity and the fast development of foreign trade are almost synchronous. This dissertation focuses on the present situation of Chinese regional foreign trade development difference and its influence to regional economic growth disparity. Based on the literature review, this dissertation extends the literature to the mechanism analysis and empirically examine of the impact of international trade on the regional economic growth disparity from both overall effect and mechanism.This dissertation firstly analyzes the general trend of China's regional foreign trade disparity, as well as the industrial and regional structure and the convergence of China's regional foreign trade disparity. From the general trend of China's provincial foreign trade development difference, it is similar to the evolvement trend of regional economic growth disparity, which is U-type. From the aspect of region structure, the overall difference in international trade disparity results from the distribution difference among regions and the East disparity. From the aspect of industrial structure, the overall difference in international trade disparity results from the final manufacture. Convergence analysis shows that, on the whole, from 1978 to 2005, there isβ- convergence but notσ- convergence, and there is also some characteristics of club convergence.The third section analyses the impact of international trade on the regional economic growth disparity from both overall effect and mechanism. Based on previous studies, this dissertation extends the Solow's model and adds the factor of international trade to the MRW convergence equation. Then this dissertation analyzes the impact of international trade on the regional economic growth disparity under the convergence framework. The results show that, from their influence to theσconvergence andβconvergence of GDP per worker, material capital and foreign trade are the main factors which cause Chinese regional economy divergence, while human capital are the main convergence factors. This means foreign trade enlarges China's regional economic growth disparity.To analyze the mechanisms through which foreign trade influences China's regional economic growth disparity, this dissertation decomposes the output growth into factors increase, technical progress and efficiency advance according to Frontier Production Function. Due to the regional international trade disparity, this will have different impact on factors increase, technical progress and efficiency advance, which in turn affects the regional economic growth difference. Therefore, this dissertation summarizes the mechanisms through which international trade affects the regional economic growth difference as capital accumulation, technology spillover and institution innovation. And this dissertation further studies the effect of foreign trade on China's regional economic disparity by empirical evidence.Empirical results show that the impact of foreign trade on regional capital accumulation, technology spillover and institution innovation between areas differs greatly. From the aspect of capital accumulation, the "foreign trade- capital accumulation - economic growth" mechanism is very different between the East and the Midwest. Through capital accumulation, foreign trade has much greater influence on economic growth in the Ease than in the Midwest. From the aspect of technology spillover, the influence of international R&D spillover varies among areas. International R&D spillover is beneficial to technical progress in the East, but has negative influence in the Midwest. The Midwest can't share the beneficial effect of international R&D spillover, which will unavoidably enlarge the regional economic growth disparity between the East and the Midwest. From the aspect of institution innovation, the "foreign trade- institution innovation - economic growth" mechanism varies among regions. In most East areas, the development of foreign trade promotes institution innovation, and then accelerates economic growth. While in most Central and West areas, foreign trade can only promote institution innovation and has no effect on economic growth, or its effect on institution innovation is not obvious. As to economic performance, provinces possessing the consequence of foreign trade development promoting institution innovation thus accelerating economic growth do better than the latter. Hence, empirical analysis from the three mechanisms also shows that the impact of foreign trade on capital accumulation, technology spillover and institution innovation differs greatly among areas, and this enlargers China's regional economic disparity.Based on the above analysis, this dissertation provides some policy suggestions, which will promote China's foreign trade growth and coordinate the regional economic development.