China’s increased export influence: An empirical analysis of the impact on Sweden’s and the United States’ industrial production between 1994 and 2008

Sammanfattning: Title: China’s increased export influence: An empirical analysis of the impact on Sweden’s and the United States’ industrial production between 1994 and 2008. Topic/course: NEKM01 Master thesis Author: Anna Persdotter Supervisor: Fredrik NG Andersson Keywords: Export, Comparative advantage, China, Sweden, the United States, Engle Granger, ECM Purpose: The purpose of this thesis is to examine how China’s increased export influence on the world market has impacted Sweden and the United States’ industrial production. Further it is analyzed if China is a threat or a possibility to these countries in matters of their capital-intensive production. Method: By using ADF tests and Engle Granger’s estimation cointegration is found in the data. To determine the long- and short-run equilibriums, in China’s impact of the two countries, an OLS and an error-correction model are estimated. Conclusion: China is indeed growing on the world market. However today she is not seen as a threat to the industrial production of Sweden and the United States. The reason being that China’s exports are value-adding for the production, which implies that the Chinese products are still labor-intensive in character. But this does not mean that China will not be a threat to these countries in the future, rather that China today has reached the position of being a threat to other countries producing labor-intensively.