Abstract
This paper studies the relationship between China’s trade and its economic development. More than two centuries ago Adam Smith argued that it is the use of imported intermediate goods that constitutes the vector through which openness improves productivity. Imported intermediate goods can relieve what would otherwise be key constraints allowing faster growth, together with better human development. While China’s trade reform is often related to its productivity growth, there has been remarkably little attention to the relationship between imports and productivity growth at the industry-sectoral level. Our paper examines the sector-specific impact of intermediate goods utilizing a time series for the share of imported intermediate goods in each sector derived from our model calculations. Our study indicates that imported intermediate goods are playing an important role in the growth of Chinese productivity.
Similar content being viewed by others
References
Athukorala P-Chandra, Yamashita N (2006). Production fragmentation and trade integration: East Asia in a global Context. North American Journal of Economics and Finance, 17(3): 233–256
Breslin S (1999). The politics of Chinese trade and the Asian Financial Crises: questioning the wisdom of export-led growth. Third World Quarterly, 20(6): 1179–1199
Broda C, Greenfield J, Weinstein D (2006). From groundnuts to globalization: a structural estimate of trade and growth. NBER Working Paper No. 12512
De Melo J, Robinson S (1992). Productivity and externalities: models of export-led growth. The Journal of International Trade & Economic Development, 1(1): 41–68
Dean J M, Fung K C, Wang Z (2007). Measuring the vertical specialization in Chinese trade. United States International Trade Commission: Office of Economics Working Paper
Feenstra R C, Hanson G H (1996). Globalization, outsourcing, and wage inequality. American Economic Review, 86(2): 240–45
Feenstra R C, Hanson G H (1999). The impact of outsourcing and high-technology capital on wages: estimates for the United States, 1979–1990. The Quarterly Journal of Economics, 114(3): 907–940
Gaulier G, Lemoine F, ÜNal-Kesenci D (2007). China’s emergence and the reorganisation of trade flows in Asia. China Economic Review, 18(3): 209–243
Grossman G, Helpman E (1991). Innovation and Growth in the Global Economy. Cambridge, MA: MIT Press
Hume D (1987). Essays, Moral, Political, and Literary (1777). Indiana: Liberty Classics
Hummels D, Ishii J, Yi K-M (2001). The nature and growth of vertical specialization in world trade. Journal of International Economics, 54(1): 75–96
Koopman R, Wang Z, Wei Sh-J (2008). How much of Chinese exports is really made in China? Office of Economics Working Paper, US ITC, No. 2008-03-B
Krugman P R (2008). Trade and wages, reconsidered. Brookings Papers on Economic Activity, 103–137
Lawrence R Z, Weinstein D E (1999). Trade and growth: import-led or export-led? Evidence from Japan and Korea. NBER Working Paper No. 7264
Rodrik D (2010). Making room for China in the world economy. American Economic Review, 100(2): 89–93
Shan J, Sun F (1998). On the export-led growth hypothesis: the econometric evidence from China. Applied Economics, 30(8): 1055–1065
Author information
Authors and Affiliations
Corresponding author
About this article
Cite this article
Berdell, J., Dong, Q.H. Developmental aspects of China’s trade pattern: The role of imported intermediate goods. Front. Econ. China 6, 556–567 (2011). https://doi.org/10.1007/s11459-011-0147-z
Received:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11459-011-0147-z
Keywords
- intermediate goods
- vertical specialization
- total productivity growth
- international linkages to development