Shifting Global Economic Paradigm


  • Abdul Ghafoor Awan Institute of Southern Punjab



China, Labor productivity, Investment, R&D, Open door policy, Exports, Output


Introduction: The 21st century was started with the dawn of a new economic puzzle of China’s fast economic growth. It has surprised the economists. The Chinese constant upward growth has shifted economic paradigm and the axis of growth appear to have been shifted from the western hemisphere to the eastern hemisphere. Some economists term it a 21st century miracle. The author has determined to test this miracle through empirical framework.

Research Question: Main research question of this study to explore the answer of the question why China is recording consistent rapid economic growth? Is this growth in the same way as other developed countries experienced in the past or is it a new phenomenon-a shift in global economic paradigm.

Objectives: The objective of this empirical analysis is to investigate into the causes of fast economic growth of China in the context whether this growth pattern is a normal phenomenon or an indicator of shifting global economic paradigm.

Methodology: Our study is spread over a period starting from 1980 to 2011 because of the introduction of economic reforms and massive economic growth. We have collected data from different sources such as China Bureau of National Statistics, IMF, World Bank and relevant research Journals and books. The selected variables for this research paper are: labour productivity, investment, exports, Research and Development expenses, capital stock, open door policy, real exchange rate and US GDP. We used ordinary least square (OLS) model to measure change in the selected variables. Five tests were used to test the stability of the model.

Findings: The Econometric results show that international trade and investment in capital stock and R&D expenses by Chinese Government are the major determinants, which are responsible for enhancing labour productivity and output in the long-run, Similarly, real exchange rate appears as an important determinant to explain change in output in the long-run.



Download data is not yet available.

Author Biography

Abdul Ghafoor Awan, Institute of Southern Punjab

Dean of Faculties, Institute of Southern Punjab, Multan, Pakistan


Adams, F.G., B. Gangnes and Y. Shachmurove, 2006. Why china is so competitive? Measuring and explaining china’s competitiveness. World Economy, 29: 95-122.

Arayama, Y. and K. Miyoshi, 2004. Regional diversity and sources of economic growth in China. World Economy, 27: 1583-1608.

Bramall, C., 2000. Sources of Chinese Economic Growth 1978 to 1996. Studies in Contemporary China. Oxford University Press.

Chow, G., 1993. Capital formation and Economic Growth in China. The Quarterly Journal of Economics, 108: 809-842.

De Long, c.B., L. Summers and A.B. Abel, 1992. Equipment Investment and Economic Growth : how Strong is the nexus. Brookings Papers on economic activity: 157-211.

Domar,Evsey D. (1946) Capital Expansion, Rate of Growth and Employment.Econometrica,14. April,137-147.

Hendry, D.F. and G. Maison, 1993. Evaluating econometric models by encompassing the var. Models, methods and application of econometrics. Cambridge Mass: Essays in Honor of A.R.Bergstron MIT Press.

Hewitt, P. and P. Aghion, 1998. Capital accumulation and innovation as complementary factors in long-term growth. Journal of Economic Growth, 3: 111-130.

Horrod, Roy F (1939). An Essay in Dynamics Theory. Economic Journal,49,June,14-33.

Johansen, S., 1988. Statistical analysis of co- integration vector. Journal of Economic Dynamics and Control, 12: 231-254.

Johansen, S. and K. Juselius, 1990. Maximum likelihood estimation and inference on cointegration-with application to the demand for money. Oxford Bulletin of Economics and Statistics, 52: 231-254.

Johansen, S. and K. Juselius, 1994. Identification of the long-term and short-term structure: An application to the islm model. Journal of Econometrics, 63: 7-36.

Juselius, K., 2007. The co-integrated var model: Econometric methodology and applications. Oxford University Press.

Knight,Frank H. (1944). "Diminishing Return from Invesment. Journal of Political Economy,52,March,26-47.

Malthod, Thomas R (1798). An Essay on the Principle of Population. London: W.Pickering,1986.

Nielson, Ole E. Barndorff, 2004. "Power and Bipower Variation with Stochastic Volatility and Jumps," Journal of Financial Econometrics, Society for Financial Econometrics, vol. 2(1), pages 1-37.

Rahbek, A., E. Hansen and J.G. Dennnis, 2002. ARCH innovations and their impact on co-integration rank Testing, Department of Statistics and Operations, University of Copenhagen. Centre for analytical Finance.WP No. 22.

Ramsey, Frank (1928). A Mathematical Theory of Saving. Ecoomic Journal,38,December,543-559.

Recordo, David (1817) On the Principles of Political Economy and Taxation. Cambridge: Cambridge University Press,1951.

Romer, P., 1986. Increasing returns and long-run growth. Journal of Economics Perspectives, 8: 3-22 Saleh-i-Martin Xavier & Robert H.Barro. 2009. Economic Growth. India. New Delhi: PHI Learning.

Shan, J. and F.T. Sun, 1998. On the Export-led Growth hypothesis: the Economic evidence from China, Applied Economics 1055-1065.

Schumpeter,Joseph A (1934). The Theory of Economic Development. Cambridge:M.A.Harvard University Press.

Smith,Adam (1776) An Enquiry into the Nature and causes of the Wealth of Nations, New York: Random House,1937.

Solow Robert M (1956) A contribution to The Theory of Economic Growth. Quarterly Journal of Economics,70,Feburry,65-94.

-- 0 --




How to Cite

Awan, A. G. (2014). Shifting Global Economic Paradigm. Asian Business Review, 4(3), 113–118.