An Empirical Research On The Relationship Between Foreign Trade And Economic Growth In Shaanxi Province

The foreign trade is being considered an exogenous factor of economic growth all through the ages, it has always played an important role of a propeller in review of those countries and regions that have fulfilled the economic growth with high speed. There has been 30 years since the reforms and opens start in China, and she has gained great achievements on both foreign trade and economic growth. Although there lies regional gap between the east and the west, Shaanxi Province, as the leading province among the northwestern region and the main area of The Grand Western Development Program, has made much progress in the foreign trade. However, with the speedup of the western development drive, Shaanxi Province, as a typical inland province of western China, is facing a problem on how to fulfill the sustainable development between the foreign trade and economy. We should try our best to understand and grasp the internal relations within them. Therefore, it is obviously provided with important theoretical and practical significance for us to further study the relationship between foreign trade and economic growth in Shaanxi Province.This paper looks on the relationship between the foreign trade and economic growth of Shaanxi Province as the research object, and emphasizes the reciprocity on them. In this paper, I use main research methods based on the combination of qualitative and quantitative analysis, the combination of empirical and normative analysis, the combination of index and model analysis. The empirical research of this paper includes two parts: the first part introduces the foreign trade dependence degree analysis and elasticity analysis to cover the relationship between foreign trade and economic growth. The foreign trade dependence analysis shows that even though trade and growth are both taken on an ascending trend, the dependence degree of foreign trade was correspondingly smaller. Then, the results of elasticity analysis show that the export will contribute a lot to the economic growth of Shaanxi province. The second part mainly discusses the relationship between the foreign trade and economic growth by using co-integration analysis. By applying Eviews 3.1, based on the statistics of Shaanxi Province from 1985 to 2007,1 perform ADF test, co-integration analysis, Granger causality tests and Error correction model to cover the relationship between the foreign trade and economic growth. Based on the quantified analysis, I draw a conclusion that the export and consumption on the economic growth are prominent, while import and investment have less influence on the economic growth. No matter what we see in long term or in short run, the augment of GRP has a notable influence on the import. Eventually their economic meanings are discussed.At the end of this paper, based on the empirical results and local economic situation, some correlative policies and suggestions are put forward on how to fulfill the harmonious developments between economic growth and foreign trade in Shaanxi Province.