China has achieved high economic growth for a prolonged period of time. Academic researchers have tried alternative explanations for this miraculous growth. This study focuses on the effect of exports and foreign direct investments (FDI) on economic performance, using a large panel data set encompassing 28 Chinese provinces over the period 1978-2000. Adopting Pedroni's panel unit root test and Arellano and Bond's dynamic panel data estimating technique, it is found that both exports and FDI have a strong and positive effect on economic growth. The results suggest that two development policies adopted in China are useful for other developing and transitional economies: export promotion and adoption of world technology and business practices.
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