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Is the Export‐led Growth Hypothesis Enough to Account for China's Growth?
Author(s) -
Herrerias María Jesús,
Orts Vicente
Publication year - 2010
Publication title -
china and world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.815
H-Index - 28
eISSN - 1749-124X
pISSN - 1671-2234
DOI - 10.1111/j.1749-124x.2010.01203.x
Subject(s) - economics , openness to experience , monetary economics , china , investment (military) , macroeconomics , exchange rate , capital (architecture) , international economics , capital accumulation , growth model , human capital , market economy , psychology , social psychology , archaeology , politics , political science , law , history
One of the missing pieces preventing us from understanding recent Chinese economic development is the role played by openness and capital accumulation in this process. The question is whether the sharp economic growth that the Chinese economy has experienced is another case of export‐led growth due to the open‐door policy or whether, on the contrary, this growth has been caused by high domestic savings and investment rates (and the consequent capital accumulation). To answer this question, we employed an empirical framework of the cointegrated vector autoregressive model. The empirical results show that both investment (in physical capital and R&D) and exports, as well as the exchange rate policy, are relevant factors in explaining China's long‐run economic growth over the past 4 decades.