Impact Of Intermediate Goods Trade On Economic Growth

Since the 1970s, driven by economic globalization and technological progress, intermediate goods trade had a rapid development and became the main stream of international trade. Under this special trade model, developed and developing countries specialized in different aspects of the production process in production chain to ensure that all production processes are placed in the best area and achieve optimal allocation of resources. Asia Pacific has superior geographical environment, economic base and political situation, which makes the region become the most concentrated areas of trading business in the global. Besides, with decreased transportation and advanced communication technologies, the new model of trade in intermediate goods will be a prominent feature of the Asia-Pacific region in the long term. Therefore, it has a very important practical significance to explore the specific impacts in trade of intermediate goods to economic growth within Asia-Pacific region.Firstly, this study will analyze the current situation of intermediate products trade in the Asia-Pacific region. Then, will make theoretical analysis on how processing trade impacts on economic growth. On this basis, this paper will do empirical analysis about this problem for the 17 economies of the Asia-Pacific region using data from 1998 to 2012.The results show that intermediate goods trade can promote economic growth significantly, but the impact degrees are different for economies with different developing levels; the more advanced the economy, intermediate goods trade has greater role in promoting the economic growth. Finally, on the basis of the comprehensive analysis, relevant policy recommendations are proposed for how to promote intermediate goods trade development in this region.