Analysis of border trade impacts on economic growth of Yunnan and the Greater Mekong Sub-region (GMS) countries

The aim of this paper is to analyze the relationship between border trade and economic growth of Yunnan province, China and Greater Mekong Sub-region (GMS) Countries, which is represented by border import, border export and real GDP. We use annual data of Yunnan province and GMS countries from 1999 to 2010. This paper includes three steps: first, tests the panel unit root, second examines the panel co-integration and third investigates the Granger causality relationship among border export, border import and economic growth. There are four conclusions. First, the data of border import, border export and real GDP have a unit root at the level. Second, the time and entity fixed model is the best model to test the panel co-integration. Third, the border imports have long-run negative relationship with economic growth based on time and entity fixed effects model and the border export have long-run positive effects on economic growth based on entity fixed effects model. Last, the relationship between economic growth and border imports, which has only one-way granger causality relationship that means border imports effects on economic growth in long-run and short-run.