Is the Export-led Growth Hypothesis Enough to Account for China's Growth?

One of the missing pieces preventing us from understanding recent Chinese economicdevelopment is the role played by openness and capital accumulation in this process.Thequestion is whether the sharp economic growth that the Chinese economy has experiencedis another case of export-led growth due to the open-door policy or whether, on the contrary,this growth has been caused by high domestic savings and investment rates (and theconsequent capital accumulation).To answer this question, we employed an empiricalframework of the cointegrated vector autoregressive model.The empirical results showthat both investment (in physical capital and R&D) and exports, as well as the exchange ratepolicy, are relevant factors in explaining China’s long-run economic growth over the past4 decades.