An empirical study of the relationship between cross-strait trade and economic growth in Taiwan

The development of cross-strait trade is more and more important to economic growth of Taiwan. Based on the economic data during 1990 to 2008, this paper builds a co-integration and error correction model for cross-strait trade and Taiwan GDP with the ADF unit root test and co-integration. Granger causality test shows that there is a long-term stable relationship between Taiwan´s economic growth and cross-strait trade and its constitution. Cross-strait trade speeds up the development of Taiwan´s economic significantly. Importing from Chinese mainland and exporting to Chinese mainland are all strongly promote the economic of Taiwan.