The Border Trade And Regional Economic Growth In China

The border trade is a special form among international trade, which is defined as the regional trade between a country and its neighboring countries. With the deepening of economic reform and opening and government's adjustment on border trade policy, the border trade in our country has been rapidly developing. Though the ratio of border trade value against the total import and export is less than 1%, it significantly promotes the economic growth in the border areas and help to the regional coordinate development as the important means to develop the foreign-oriented economy. It will be the important theoretical value and reality significance to quantitatively study the long run equilibrium and causality relation between the border trade and regional economic growth.Applying the panel data including eight border provinces such as Xinjiang, Neimenggu, Heilongjiang etc between 1992 to 2004, this paper analyzes the four stages and trend characteristics during the development process of border trade. Though the total border trade has been rising and trade goods structure has been optimizing, the border trade mainly concentrates in three border provinces, that is Xinjiang, Neimenggu,Heilongjiang in according to the regional distribution. Further panel unit root test and co-integration are applied to explore the long run equilibrium relation among the border export, border import and regional economic growth. The results show that there exist unit roots for the level values of these three variables and the long run equilibrium among these variables. The co-integration result presents that the border trade can produce the significantly positive effect on the regional growth, but the border import trade may negatively affect regional economic growth in a certain degree. Panel Granger test show that there exist the bi-directional Granger-causalities between the border export trade and economic growth in the long run or the short run. However in the long term the border import trade is the Granger-causality of the regional economic growth, but this is not sustained in the reverse direction over the period 1992-2004. Based on the theoretical researches, this paper provides the policy suggestions from the decision support to the development of border trade and the optimization of trade goods structure.