International Comparison And Determinants Analysis Of Foreign Trade Dependenc E Ratio And Foreign Trade Contribution Ratio

With the development of economic globalization,foreign trade has become an important factor affecting the economic development of a country.Thus the situation of opening up draws much attention,especially for China who has implemented the opening up policy for more than thirty years.In this paper,we use the most highly accepted concept foreign trade dependence ratio to measure the risk of opening up and foreign trade contribution ratio to measure the profit of opening up.It is of great meaning to understand the determinants of world’s foreign trade dependence ratio and foreign trade contribution ratio correctly,so as to understand the evolution of China’s foreign trade dependence ratio and foreign trade contribution ratio to forecast the variation trend of China’s foreign trade dependence ratio and foreign trade contribution ratio and to grasp China’s opening up policy.In this paper,we analyze and compare the determinants of foreign trade dependence ratio and foreign trade contribution ratio,using panel data for 43 countries,from 1980 to 2011.By using systematic GMM method,we find that:(1)Population,urbanization,FDI ratio,household consumption ratio and real effective exchange rate have significant effects on the foreign trade dependence ratio and the foreign trade dependence ratio has strong inertia.(2)Then we add the ratio of domestic credit to private sector to GDP as the proxy variable of financial development into the benchmark model,but we have not found significant results supporting the evidence that financial development has any relationship with foreign trade dependence ratio.At the same time,we add net foreign assets into the benchmark model,but we have not found significant results supporting the evidence that net foreign assets has any relationship with foreign trade dependence ratio.(3)Household consumption ratio and inflation rate have s ignificant effects on the foreign trade contribution ratio and the foreign trade contribution ratio has strong inertia.(4)Then we add the ratio of domestic credit to private sector to GDP as the proxy variable of financial development and net foreign asse ts into the benchmark model,but we have not found significant results supporting the evidence that financial development or net foreign assets has any relationship with foreign trade contribution ratio.In this paper,we think that under the new international and domestic economic development background,to maintain a sustained growth of the national economy,the policy focus should be shifted to the improvement of domestic consumption ratio to promote domestic demand.