Trade Openness, Economic Growth and the Vicissitude of Labor-intensive Industries: The Case of China

Abstract

In this paper, we use China’s 1986-2008 data to make an empirical analysis on the interrelationship between trade openness, economic growth and the structural change of labor-intensive industries by using simultaneous equation models and a VAR model. Our empirical study leads to the three conclusions. First, trade openness has accelerated economic growth, though with some negative impact on the development of labor-intensive industries; Second, economic growth has had a positive effect on trade openness, but again negatively impacted the development of labor-intensive industries. Third, the expansion of labor-intensive industries has had negative effects on both trade openness and economic growth.

Keywords

• trade openness
• economic growth
• labor‑intensive industries
• transformation of outward pattern of economic development
• simultaneous‑equations model
• var model