Laos-China Agricultural Trade Relationship And Its Impact On Laos's Economic Growth

This paper investigates Lao-China agricultural trade relationship and its impact on Laos' s economic growth and the main objectives of this research are to 1)examine the overviews of agricultural trade relationship between Laos and China,2)to investigate the effects of Lao-China agricultural trade on Laos' economic growth and 3)to study on the determinants of Lao agricultural exports to China as well as the various factors influencing on the export of Lao agricultural products to China based on the outcomes of econometric model which the time series data was adopted in the spanning of 1992-2016 for 25 years and those variables are gathered from many sources namely World Development Indicators(WDI),World Bank(WB),United Nations Stats(UN stats),Ministry of Planning and Investment(MPI),Ministry of Industry and Commerce(Mo IC)and other aspects.Similarly,this paper employs a multiple regression model to investigate the relationship between independent variables on dependent variables under considering model by using STATA version 14.2.The findings of empirical evidence in each linear regression have checked the problems occurring in time series analysis namely heteroskedasticity and serial correlations.The outcomes of first multiple regression demonstrate that foreign direct investment(ln FDI),The imported volume of Laos from China(ln IM),exchange rate(ln EXCH),labor force(ln LF)are statistical significance and have influence on gross domestic product(ln GDP)with a 5% and 1% significance level respectively,whilst the three remaining control variables notably the total export value of Laos to China(ln EX),inflation rate(IFL)and total natural resource rent(TNRR)are not significant statistically as they do not contribute on economic growth(ln GDP).Similarly,by taking into consideration new control variables the result of the second model found that gross capital formation(lngcf),manufacturing export(lnme)and foreign direct investment(ln FDI)has statistical significance and positive influence,whilst the trade openness is negatively related and statistical significance on economic growth in Lao PDR.Nevertheless,being a member of WTO,labor force and agricultural export has no impact as they do not contribute to economic growth in Lao PDR.Moreover,this paper also identified the determinants of Lao agricultural product exports to China.The result of the goodness of fits model substantiates that there was no heteroskedasticity and no serial correlation between residuals which has been confirmed the consistency of the estimated model.As a result,it is seen that labor force and trade openness are a statistically significant and have positive effect on Lao agricultural product exports to China by 10% and 5% significance level in succession,whereas exchange rate has negatively impact on Lao agricultural product exports to China with a 10% significance level.