Globalisation
Angel or devil?: China’s trade impact on Latin American emerging markets
How will China’s trade growth impact Latin America?
Authors:
J. Blázquez-Lidoy; J. Rodríguez; J. Santiso
Publisher:
OECD Development Centre, 2006
This paper analyses the long- and short-term trade risks and opportunities on Latin America of China’s emergence as a global leader in trade. The paper argues that while countries in south Asia stand to lose out as a result of China’s impressive growth, Latin America will largely benefit from it due to their position in supplying China with raw materials.
The paper draws several conclusions, including the following:
- from the trade perspective, Latin America will benefit from increased Chinese demand and growth, particularly sectors such as agriculture. However those sectors that specialise in labour-intensive manufactures exports would be disadvantaged
- Latin America’s commodity endowment makes it an idea partner for China and fits in with the latter’s needs and strategy to secure food and energy imports in order to avoid shortages
- a potentially negative consequence of China’s relationship with Latin America would be an entrenchment of Latin America’s specialisation towards commodities that have been traditionally characterised by strong price-volatility. In fiscal terms, this could also increase Latin America’s fiscal receipts volatility.
[adapted from authors]
