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Title: Trade as the main engine of growth : a case study of China
Authors: Galea, Martina
Keywords: China
Economic development
Issue Date: 2011
Abstract: Though the literature regarding this trade-growth relationship is boundless, the aim of this study was to take the established approach of Granger causality and apply this specifically to China for the 30-year period from 1978 to 2008. The study has focused on Gross Domestic Product growth and the components of GDP in order to analyse which variable the econometric analysis points to as being most influential. By studying China's somewhat extreme case, the aim was to prove, within limitations discussed at later stages, whether trade is the key to growth or whether the critics of a more traditional view of trade were in fact correct. Results show that there is no proven Granger causality between trade, represented by net exports, and GDP growth. However, other non-data-related growth-inducing factors were then discussed in light of these results in order to further analyse the reasons for the exceptional growth in China in this period. From the literature review of this study, there were no definite conclusions regarding the presence of causality and its direction. The results varied for different countries and econometric specifications but the outcomes were not conclusive or applicable across the board. These results suggest that the trade-growth relationship cannot be generalised but rather owes its existence to specific characteristics of the economies of the world. This particular study of China follows this trend. The results achieved through the Granger causality test conclude that GDP growth is not Granger caused by the variables tested but rather that, for the most part, GDP growth Granger caused these variables in the 30-year period studied. This implies that the causes of economic growth are in fact not restricted to the elements of GDP but are also relat
Description: B.COM.(HONS)ECON
Appears in Collections:Dissertations - FacEma - 2011
Dissertations - FacEMAEco - 2011

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