Empirical Analysis For The Relation Of Foreign Trade And Economic Growth Of Changzhutan City Group

The relationship between foreign trade and economic growth has been a very important part in developmental economists and international ecomomists'studies. The development of economic globalization and regional economic integration has encouraged the international trade's liberalization tendency, and thus foreign trade has become an important means for developing national or regional ecomomy and increasing national welfare. How to correctly grasp the relationship between foreign trade and economic growth and how to make correct foreign trade policies have great significance, both theoretically and practically, in improving the foreign trade structure and enhancing the foreign trade's contribution to economic growth.The regional differences in historical background, location condition, economic growth level, the degree of opening to the outside world, and the foreign trade structure produce different effects in different regions' economic growth. This paper studies the relationship between foreign trade and economic growth in the city group of Changzhutan, and analyzes Changzhutan's foreign trade and economic development status. Taking into consideration such variables as the volume of Changzhutan's import and export trade, gross regional product (GRP), regional investment and consumption, the paper first builds an econometrical model for Changzhutan's foreign trade and economic growth after an elastic analysis of Changzhutan's foreign trade and an analysis of its foreign trade dependence degree. Based on ADF test, Co-integration test, and Granger causality test, the essay ascertains the long-term relationship between Changzhutan's foreign trade and its economic growth, evaluates its short-term dynamic equation, and sets up an error correction model (ECM).According to the analysis of foreign trade dependence degree, foreign trade has great effect on Changzhutan's economic growth. For years its foreign trade had developed steadily, but 2007's financial turbulence brought great impact on the foreign trade; the economic decline, however, has been offset by an influence from investment and consumption. The elastic analysis shows that the increase in export trade has a greater promotion effect on Changzhutan's GRP than the increase in import trade does. The results of Co-integration test reveals a long-terme equilibrium relationship between Changzhutan's GRP, import and export trade, investment and consumption. Granger causality test indicates, however, that Changzhutan's GRP has no obvious effects on export trade and Changzhutan has not made full advantage of its import trade in developing its economy. Based on all these analyses and test results, this essay, in the light of both the characteristics of Changzhutan's foreign trade and those of its economic growth, proposes some appropriate measures and suggestions.