Abstract According to the view of Mazumdar (1996), as long as trade can improve the relative profitability of export goods, production function will expand. The net imports of capital goods and the net export of consumption goods will lead to the decline of depreciation. Both of these two factors will promote the rise of capital accumulation. Empirical results show that whether the trade structure can bring about increases of investment rate depends on the efficiency of the financial market. Those factors such as lower rate of savings-investment conversion, stronger banking system monopoly power, and higher operating costs weakened the positive effect of capital goods import on capital accumulation.
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