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Relationships between economic growth, foreign direct investment and trade: evidence from China

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  • Xiaohui Liu
  • Peter Burridge
  • P. J. N. Sinclair

Abstract

This study investigates the causal links between trade, economic growth and inward foreign direct investment (FDI) in China at the aggregate level. The integration and cointegration properties of quarterly data are analysed. Long-run relationships between growth, exports, imports and FDI are identified in a cointegration framework, in which this paper finds bi-directional causality between economic growth, FDI and exports. Economic development, exports and FDI appear to be mutually reinforcing under the open-door policy.

Suggested Citation

  • Xiaohui Liu & Peter Burridge & P. J. N. Sinclair, 2002. "Relationships between economic growth, foreign direct investment and trade: evidence from China," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1433-1440.
    • Handle: RePEc:taf:applec:v:34:y:2002:i:11:p:1433-1440
    DOI: 10.1080/00036840110100835
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    References listed on IDEAS

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    1. Ben-David, Dan & Loewy, Michael B, 1998. "Free Trade, Growth, and Convergence," Journal of Economic Growth, Springer, vol. 3(2), pages 143-170, June.
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