Impact of Trade Openness and Human Capital on Economic Growth: A Case Study of China
DOI:
https://doi.org/10.61506/01.00560Keywords:
GDP, trade openness, human capital, labor force, inflationAbstract
This study examines the impact of trade openness and human capital on economic growth in China. The Autoregressive Distributed Lag cointegration model (ARDL) and CUSUM-of-squares test are used for data duration 1990-2023. Main results of the study show that trade openness and human capital are positively correlated with economic growth. Human capital is considered one of the most profitable assets in the country's economy, While, the country’s economy does not directly affect by trade openness. To enhance economic growth, the following suggestions can be made 1) reduce Trade Barriers like Lower tariffs, quotas, and other trade restrictions to facilitate international trade. 2) Increase funding for primary, secondary, and tertiary education to raise the average years of schooling and literacy rates. 3) Implement policies that improve ease of doing business, such as reducing bureaucratic red tape and enhancing legal protections for investors.
References
Adu-Gyamfi, G., Nketiah, E., Obuobi, B., & Adjei, M. (2019). Trade openness, inflation and GDP growth: Panel data evidence from nine (9) West Africa countries. Open Journal of Business and Management. DOI: https://doi.org/10.4236/ojbm.2020.81019
Ali, A. (2011). Disaggregated import demand functions of Pakistan; An empirical Analysis. M-Phil Thesis, NCBA&E, Lahore, Pakistan, 1-70.
Ali, A., & Naeem, M. Z. (2017). Trade Liberalization and Fiscal Management of Pakistan: A Brief Overview. Policy Brief-Department of Economics, PU, Lahore, 1, 1-6.
Amna Intisar, R., Yaseen, M. R., Kousar, R., Usman, M., & Makhdum, M. S. A. (2020). Impact of trade openness and human capital on economic growth: a comparative investigation of Asian countries. Sustainability, 12(7), 2930. DOI: https://doi.org/10.3390/su12072930
Andreou, E. (2021). A literature survey trade policy dynamics: insights for assessing poverty and inequality impacts. Journal of Business and Economic Options, 4(4), 1-8.
Barro, R. J., & Sala-i-Martin, X. (1997). Technological Diffusion, Convergence, and Growth. Journal of Economic Growth. DOI: https://doi.org/10.1023/A:1009746629269
Cizakca, M. (2024). Understanding the Determinants of Foreign Trade Volume in Turkiye: An Empirical Analysis. Journal of Business and Economic Options, 7(1), 19-28.
Fatima, S., Chen, B., Ramzan, M., & Abbas, Q. (2020).” The Nexus Between Trade Openness and GDP Growth: Analyzing the Role of Human Capital Accumulation,” Sage Journals. DOI: https://doi.org/10.1177/2158244020967377
Han, J. S., & Lee, J. W. (2020). Demographic change, human capital, and economic growth in Korea. Japan and the World Economy. DOI: https://doi.org/10.2139/ssrn.3403884
Hye, Q. M. A., Wizarat, S., & Lau, W. Y. (2016). The impact of trade openness on economic growth in China: An empirical analysis. The Journal of Asian Finance, Economics and Business. DOI: https://doi.org/10.13106/jafeb.2016.vol3.no3.27.
Kong, Q., Peng, D., Ni, Y., Jiang, X., & Wang, Z. (2021). Trade openness and economic growth quality of China: Empirical analysis using ARDL model. Finance Research Letters. DOI: https://doi.org/10.1016/j.frl.2020.101488
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics, 16(3), 289-326. DOI: https://doi.org/10.1002/jae.616
Ridha, M. R., & Parwanto, N. B. (2020). The effect of foreign direct investment, human development and macroeconomic condition on economic growth: Evidence from Indonesia. Journal of Indonesian Applied Economics. DOI: https://doi.org/10.21776/ub.jiae.2020.008.02.5
Rizki, C. Z. (2023). Does Trade Openness and Human Resources Affect the Economic Growth of ASEAN Countries. In 1st UMSurabaya Multidisciplinary International Conference 2021 (MICon 2021).
Shahbaz, M., Nasreen, S., Ling, C. H., & Sbia, R. (2014). Causality between trade openness and energy consumption: What causes what in high, middle and low income countries. Energy policy. DOI: https://doi.org/10.1016/j.enpol.2014.03.029
Sun, Y., & Chang, Y. (2020). Trade and Poverty in Developing Countries: Beyond Assumptions to Nuanced Understanding. Journal of Business and Economic Options, 3(4), 167-175.
Uko, A. K., & Nkoro, E. (2012). Inflation forecasts with ARIMA, vector autoregressive and error correction models in Nigeria. European Journal of Economics, Finance & Administrative Science, 50, 71-87.
Wang, Q., Zhang, F., & Li, R. (2023). Revisiting the environmental kuznets curve hypothesis in 208 counties: The roles of trade openness, human capital, renewable energy and natural resource rent. Environmental Research. DOI: https://doi.org/10.1016/j.envres.2022.114637
Xu, Y., & Li, A. (2020). The relationship between innovative human capital and interprovincial economic growth based on panel data model and spatial econometrics. Journal of computational and applied mathematics. DOI: https://doi.org/10.1016/j.cam.2019.112381
