Openness, openness policy and economic growth: A case study of China.

摘要

This dissertation presents a case study on the impact of China's openness and openness policies on its regional income and economic growth.; There are three chapters in this dissertation. The first chapter studies the effects of openness on regional income and growth in China. To control for the endogenous causality, this chapter constructs exogenous components of openness to foreign direct investment (FDI) and trade based on geographic and cultural attributes of Chinese provinces, and then uses them to obtain the instrumental variable (IV) estimates of openness on income and growth. We find positive effects of FDI on both income and growth, which are in most cases precisely estimated and economically large.; The second chapter explores the mechanisms about how openness improves income and growth in China. Frankel and Romer (AER, 1999)'s methodology is used to study the channels through which openness may improve income. Growth accounting methodology is used to decompose income, in which output per worker is decomposed by physical capital per worker, human capital, and total factor productivity (TFP). The effects of FDI and trade on each component are estimated. Estimates suggest that both FDI and trade raise income mostly through physical capital accumulation and TFP. FDI appears to be a much more substantial factor than trade in raising income.; Chapter three is a thorough study on the effects of China's openness policy (with a concentration on openness in terms of FDI on regional economic growth in China. This chapter first proposes a critical description and analysis on each of the major openness policies implemented in China over the past two and a half decades, followed by an empirical investigation for the effects of these policies on regional growth in China over the sample period of 1990-2001. The IV approach is used again to control for the possible endogeneity between openness and growth measures in our cross-sectional growth model. On the other hand, to allow for possible province-specific fixed effects in our time-series cross-sectional growth model, the least squares dummy variable (LSDV) approach is employed. We find that, among all major openness policies examined in this paper, the policies of opening and developing coastal cities, export processing zones (EPZs), economic technology development areas (ETDAs), high and new technology industrial development zones (HNTIDZs) and the Yangtze Riverside areas are the most significant policy factors in enhancing regional economic growth in China.