A Test on Co-integration and Causality Relationship between Foreign Trade and Economic Growth ——An Empirical Analysis on the Data of Shanghai from 1978 to 2001

Regarding the controversy about whether foreign trade improves economic growth, this paper employs the measurement of co integration test and causality test to examine the relationship among import, export and GDP according to their respective data from 1978 to 2001 in Shanghai. It discovers that there is long term equilibrium among import, export and economic growth, mutual causality relationship respectively, between export and GDP, and between export and import, indicating that economic growth in Shanghai is export inducing.