Research On The Relationship Between Financial Development, Technological Progress And Service Trade

The global economic integration promotes development rapidly of the international trade and financial industry. Trade in services whose proportion is till much higher than trade in goods, turns into the focus of competition of national trade. Following from the analysis of the literature, it is shown that the improvement of the level of financial development can create efficient investment and financing market for the development of trade that is promoted simultaneously. The active financial market can expand the corporate R&D investment, and do technological innovation. While, technique is an important support mean for the development of trade in services, which can be promoted by the financial development though technologicalprogress. From the research results of scholars at home and abroad can be seen that most of the previous studies focus on the analysis of it, as the assumption that "all men are rational" in economics, can not be achieved. We can not separate completely the financial development (or technological progress, or trade in services) from the economic system.Therefore, this paper, firstly, analyzes the relationship between any two indicatory ariables; meanwhile, the research framework also includes the analysis for relationship among the three.Combiningwith the present development of our country, theempirical research in this paper is done on the basis of theoretical explanations. The measurement indexes of financial development includes:FD, FE and FS. The index of technological progress is estimated by using the DE Malmquist, denoted by TP. The index of trade in services is represented by TS and El. All indexes above are noted in the abbreviated form. Based on this, for the time sequences from 1992 to 2003, the constructed VAR model is used for doing empirical analysis, then drawing the conclusion and giving the corresponding suggestions and measurements.The conclusions reached in this paper are as following:the first level is co-integration test, where FD, FE, FS and TE (EI or TP) have a long run co-integration relationship, so as TS and TP, TS(or EI)and FD,FE, FS, TP as well. The causality test is the second level, the results are:FE is the single Granger reason for El, while EI is the single reason for FD, FS. The Granger reason for FS is TP, and for TP is El; FS become the single reason for FE, FD. FE and TP, FD can be Granger causality relationship mutually. The third level uses impulse response function to examine the VAR model constructed for every part with stability.