An Empirical Analysis of the Trade Relationship between the Netherlands and China

Eduard Timmers

Abstract


This paper aims to analyze the Trade Relationship between the Netherlands and China by looking at the level of imports and exports and FDI. This is done by first looking at the main statistics of each respective country to see in which points they differ. In the Literature Review previously researched trade models are discussed and a fitting model is selected. In this paper the gravity model of trade was chosen to test the hypotheses and run a regression on the variables. Following this the imports and exports between the two countries are more closely inspected. A general overview of FDI stocks of each respective country in the other country will be analyzed. It becomes clear that FDI and total trade have been increasing constantly despite the global financial crisis. Besides this it can also be seen that efforts of both the Chinese and Dutch government have kept the FDI increasing steadily. The gravity model therefore seems like a good fit to test this relationship. The  paper is concluded by stating that the following discoveries were made: It was found that the hypothesis of GDP growth having a positive relationship with Trade growth was rejected. Chinese FDI in to the Netherlands was found to have a negative effect on Chinese Imports. Furthermore it was also found that Dutch Tariffs have a negative effect on the growth in Chinese Imports. The recommendations that follow state that more in-depth findings will be provided in further research.


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ISSN : 2251-1555