Foreign Trade And Total Factor Productivity

China's economy has been developed quickly with the fast growth of international trade during the 30 years' open policy, with the average growth rate:9%. China's economy development has achieved great success, and is recognized as "the miracle of economy" among the world's economists. In the mean while, the degree of dependence upon foreign trade is keeping growing every year. In 1978, Chinese degree of dependence upon foreign trade was only 48.5%, but it has increased to 69.8% in 2004. In the short 26 years, the degree of dependence upon foreign trade has increased by 13.4 times. It is obvious that the foreign trade and economy growth have close relationships. But people have different ideas about the reason why China's economy grows so fast. Some scholars think that: it is because of high input, high saving rate, high investment rather than TFP(total factor productivity) growth that has caused growth of econmy in China and new industrial countries' of east Asia. So, the growth of east Asia's miracle can't be sustained. But some scholars hold that the reason why China's economy could survive the east Asia financial storm and keep growth is partly because of China's finacial policies, and larger partly because of TFP's growth. Is it high input or TFP's growth? There is no definite answer, so it is necessary to analyse the role of foreign trade playing in TFP's growth.The first part introduces the thoery and counting method of TFP, based on this, it has also analysed the relationship of foreign trade and TFP, generalized the empirical relationships of foreign trade and TFP's growth. The second part analysed the changes of trade polices, the development of foreign trade, the changes in components of foreign trade. The third part introduces the mechanisms of how foreign trade influences TFP, the choice of independent variables, and the value of TFP. It also generalized the the methods to measure openness,which method we decide to use and why. The forth part analyses the relationship between TFP and independent variables, and the concludes that impot can accelerate the growth of TFP, but export's role is uncertain. The fifth part comes up with some polic suggestions according to the empirical results.