Do Globalization and China’s WTO Accession Affect Social Spending in Its Eleven Neighboring Countries? An Empirical Study of the China Shock
type: CreativeWork
description: This dissertation investigates whether globalization and China’s WTO accession in 2001 have any impact on government expenditure to social security transfers and human capital of its eleven neighboring countries--Bangladesh, India, Indonesia, Japan, Korea, Malaysia, Nepal, Pakistan, the Philippines, Singapore, and Thailand. These countries have enjoyed economic growth from intra-regional trade and foreign direct investment (FDI). Due to Chinese liberalization of trade and FDI-led growth policies, China became the favorite destination for foreign investors because of the large population providing enormous potential markets for consumption of goods and services as well as having a huge pool of low-wage workers for lower cost production. With the help of advance technology, an increase in factor productivity contributed to China rapid economic expansion, particularly after 2001. Studies conducted by trade and labor economists have indicated that China’s powerful comparative advantage produced a shock to labor markets in other economies. In the context of empirical research, this research examines the effects of the China shock on welfare policies in its neighboring countries. The Heckscher–Ohlin–Samuelson model (HOS) states that relatively abundant factor endowments enable a country to gain from trade while relatively scarce factor endowments cause an economy to lose, and that trade can entail income distributive issues. Motivated by the HOS theory and the ongoing debate over government’s policy choices, the compensation hypothesis versus the efficiency hypothesis, a pooled time-series error-correction model has been adopted in the study to analyze the time dynamics and to correct for serial correction. Following the methodology that previous studies have employed, the research constructs a dummy variable using the year of 2002 as a break point to see if China’s WTO entry has any impact on public spending in these countries; also, the study controls the volume of trad…
abstract: This dissertation investigates whether globalization and China’s WTO accession in 2001 have any impact on government expenditure to social security transfers and human capital of its eleven neighboring countries--Bangladesh, India, Indonesia, Japan, Korea, Malaysia, Nepal, Pakistan, the Philippines, Singapore, and Thailand. These countries have enjoyed economic growth from intra-regional trade and foreign direct investment (FDI). Due to Chinese liberalization of trade and FDI-led growth policies, China became the favorite destination for foreign investors because of the large population providing enormous potential markets for consumption of goods and services as well as having a huge pool of low-wage workers for lower cost production. With the help of advance technology, an increase in factor productivity contributed to China rapid economic expansion, particularly after 2001. Studies conducted by trade and labor economists have indicated that China’s powerful comparative advantage produced a shock to labor markets in other economies. In the context of empirical research, this research examines the effects of the China shock on welfare policies in its neighboring countries. The Heckscher–Ohlin–Samuelson model (HOS) states that relatively abundant factor endowments enable a country to gain from trade while relatively scarce factor endowments cause an economy to lose, and that trade can entail income distributive issues. Motivated by the HOS theory and the ongoing debate over government’s policy choices, the compensation hypothesis versus the efficiency hypothesis, a pooled time-series error-correction model has been adopted in the study to analyze the time dynamics and to correct for serial correction. Following the methodology that previous studies have employed, the research constructs a dummy variable using the year of 2002 as a break point to see if China’s WTO entry has any impact on public spending in these countries; also, the study controls the volume of trad…
author: Xu, Jian Qing
keywords: China Shock, globalization, Social Spending, Economics
date published: 2024-01-01T08:00:00Z
date modified: 2026-07-24T01:40:49Z
provider: Claremont Graduate University
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: Claremont Graduate University