The Study Of The Relationship Between Foreign Trade And Economic Growth

Western economists began to explore the relationship between foreign trade and economic growth, research on this issue never stop, scholars in different eras put forward a lot of different viewpoints from different angles., many representative of scholars emerged meanwhile a large amount of excellent results were produced both theoretical and empirical. As a result of the difference of research methods and the subject of the research, no unified conclusion is reached yet. Most researchers agreed that foreign trade promote economic growth according to obtained results, but we have to analyze according to specific countries and regions.Shandong province which located in the east coast of China gained a continuous growth of economic aggregate volume and foreign trade volume since the implement of China’s reform and opening up policy and it’s in front of many other provinces. In 2014, the total economic output in Shandong Province reached 5.9 trillion yuan, total foreign trade reached 1.7 trillion yuan, these data indicate that Shandong Province is a large economic volume and foreign trade volume in China. This paper analyze the relationship between foreign trade and economic growth based on the data of Shandong Province, besides this paper make a conclusion of problems which exist in the development of foreign trade and put forward some corresponding recommendations hoping to provide a reference to other provinces in the development of foreign trade.Firstly, this paper discusses some typical theories on Foreign Trade and Economic Growth meanwhile summarizes the empirical analysis done by some scholars both at home and abroad, discuss the mechanism of how foreign trade promote economic growth and lay a theoretical foundation for the full text. Secondly analyze the economic situation and foreign trade in Shandong province. Thirdly, in the empirical part of the article, the variable of economic growth, total foreign trade volume, exports, imports, consumption and investment are brought into the model, by using VAR model, stationary test, cointegration test, Granger causality test, impulse response function and variance decomposition we draw the following conclusions:total foreign trade, imports, exports, consumption and investment could incentive economic growth, exports make a greater contribution to economic growth compared to imports; there is a two-way Granger causality between the total amount of foreign trade and economic growth in Shandong province, there is a two-way Granger causality between exports and economic growth; economic growth is the Granger cause of exports, but imports is not the Granger cause of economic growth.