The Theoretical And Empirical Study Of Environmental Effects Of Guangdong's Processing Trade

Since the reform and opening-up policy, China's processing trade was developed rapidly and its effect on economic growth and expansion of employment is huge. As pioneer of developing processing trade in China, processing trade in Guangdong is boosting rapidly under the conditions of preferential policies, abundant labor and preferable geographical conditions. However, as the rapid development of processing trade in Guangdong, waste disposal including waste water, waste gas and solid is increasing. As a result, environmental pollution problems have been becoming very serious in Guangdong. How Guangdong's processing trade influences environment, and how to achieve virtuous interaction between economic development and environment has become a practical topic.Through the combination of theoretical and empirical research, this paper has analyzed the effect of Guangdong's processing trade to environmental quality during 1998 to2009. Theoretical study is mainly to clear influential factors to environmental effects of Guangdong's processing trade. On the basis of theoretical research, this paper has discussed the effect of processing trade on environment through panel and time series analysis. Panel analysis model is an improved general equilibrium model about relationship between trade and environmental pollution. Time series analysis including Unit Root Test, cointegration Test, Granger Causality Test, VAR and Impulse Response Function has studied long-term relationship between Guangdong's processing trade and environmental pollution.The result shows that Guangdong's processing trade causes the environmental pollution. Positive technical effect can't offset negative scale effect and structural effect, therefore pollution emissions are increasing. In the end, policy proposals for coordinated development of processing trade and environment are given in accordance with the results of this paper's researches.