Empirical Study On The Trade Mode's Contribution To Economic Growth

With the development of economic globalization, China's processing trade, developed by using the comparative advantage of low-cost labor, has also been in the challenges of globalization, thus the upgrading of processing trade become especially important. As the powerful provinces of Foreign Trade, under the respective models of economic development—"Wenzhou Model"and"Suzhou Model", Jiangsu province and Zhejiang province have developed their own unique way of foreign trade: Jiangsu focuses on Processing Trade, Zhejiang on General Trade. In the storm of International Financial Crisis, these two provinces are in different trade advantages, but also exposed their own problems.Firstly, from the point view of theories, this paper begins with the influence mechanism of trade patterns and economic growth. Then, it analyzes the practical basis of choosing different trade modes.Secondly, from the different trades'scale and proportion, enterprises, commodities, contributions to economic growth, trade competitions and add-value rate, this paper has a comparative analysis on the development of general trade and processing trade between Jiangsu and Zhejiang by using charts and data.Thirdly, this paper is mainly from the empirical point of view to study the different trades'contribution to the economic growth of Jiangsu and Zhejiang province. This paper established the Log-linear Model to analyze the impact of processing trade and general trade to the area's economic growth. In the model, GDP is the dependent variable, and domestic capital, FDI, effective labor, net processing trade, net general are the explanatory variables. To solve multicollinearity, the method of ridge regression is used.Fourthly, on the basis of empirical analysis, this paper further studies the factors which mainly decide the trades'effects on economic growth. Take the export departments of Jiangsu processing trade and Zhejiang general trade as two production systems, this paper respectively built two models in these two provinces to study this problem by the method of ridge regression.Finally, the whole thesis is summarized and according to the actual situation in Jiangsu and Zhejiang provinces, some policy recommendations of trade development are proposed. This paper draws some conclusions, the general trade effect on economic growth is bigger than that of processing trade, but the gap between them is very small; Human capital is the key factor in the process of trade and economic development; the contribution of Jiangsu's ordinary professional human capital is more obvious than that of Zhejiang's entrepreneur human capital; the institutional reform in private economy is the main driving force and source of general trade development in Jiangsu province; the low value-added rate of export is the bottleneck in the development of processing trade.Since the difference of contribution between general trade and processing trade to economic growth is little, on the other hand, human capital and institutional environment are the key factors in trade development, Jiangsu and Zhejiang provinces should develop trade in accordance with their own actual conditions. Not only fully strengthen the role of human capital, but also accelerate institutional innovation, to upgrade processing trade and maintain the harmonious development of processing trade and general trade.