Roberto Porzecanski

CHINA MA T TERS China's Economic Impact in Latin America

Resumen Este artículo analiza dos aspectos de la relación económica entre China y América Latina y el Caribe (LAC). En primer lugar, examinamos en qué medida el crecimiento económico de China está afectando los fl ujos comerciales y de inversión entre China y LAC. En segundo lugar, analizamos en qué medida el advenimiento de China, como potencia exportadora a nivel mundial, afecta la capacidad de los países de LAC de competir en los mercados mundiales, tanto en términos de exportaciones como en la capacidad de atraer inversión extranjera directa (IED). Para cada una de estas preguntas, ofrecemos una evaluación crítica de los nuevos estudios que se han llevado a cabo sobre el tema. También presentamos una serie de análisis que confirman y profundizan las conclusiones de algunos de estos trabajos. Además, presentamos las consecuencias que creemos se derivan de esta literatura, tanto para la formulación de políticas públicas como para futuras investigaciones en el área. Señalamos que hay un consenso emergente en referencia a China y LAC. Con respecto a flujos comerciales y de inversión, China explica una parte significativa del impulso exportador y de inversión experimentado por LAC en años recientes. Sin embargo, China exporta a LAC más de lo que importa desde LAC. Con respecto a la competitividad a nivel mundial, LAC no se ve significativamente amenazada por las exportaciones de China en los mercados internacionales. La excepción es México. This paper analyzes two aspects of China’s economic relationship with Latin America and the Caribbean (LAC). First, we examine the extent to which China’s economic growth is affecting trade and investment flows between China and LAC. Second, we analyze the extent to which the emergence of China as a world exporter affects the ability of LAC countries to compete in world markets both in terms of exports as well as in the capacity to attract foreign investment. For each of these questions, we provide a critical assessment of a new body of work in this area, as well as offer a series of analyses that build on and confi rm some of this previous work. Furthermore, we offer implications for policy and future research. We show that there is an emerging consensus regarding China and LAC. With respect to trade and investment flows, China accounts for a significant amount of the boost in LAC exports and foreign investment in recent years, but is exporting more than it imports. In terms of global competitiveness, LAC is not significantly threatened by Chinese exports in global markets, with the exception of Mexico.

Economic reform and foreign direct investment in Latin America: a critical assessment

After almost 25 years of experimenting with the neo-liberal economic reforms collectively known as ‘Washington Consensus’ policies, Latin Americans are starting to re-assess the merits of these policies at the voting booth. Whereas one of the key policies of the ‘Washington Consensus’ package was the liberalization of investment regimes, many of the newly elected governments are beginning to scrutinize the role of foreign direct investment (FDI) in their countries. Indeed, some nations have gone as far as to nationalize foreign firms. Without endorsing or condoning the actions taken by these governments, in this paper we argue that it is quite rational and very justified for governments in the region to re-evaluate the role of FDI for their development paths. Our exhaustive review of the literature on FDI in Latin America during the reform period shows that very few nations in the region actually received significant amounts of FDI as a result of reform, and that when FDI did materialize, it often fell far short of generating the necessary linkages required to make FDI work for economic development.

What a Difference a Few Years Makes: China and the Competitiveness of Mexican Exports

Politicians and the general public have shown great concern about the growing strength of the Chinese economy. In a recent pioneering article in this journal, Lall & Weiss (2005a) examined whether such concerns were justified in Latin America. The authors evaluated the competitive impact of exports from the People’s Republic of China on Latin America and the Caribbean (LAC) by comparing changes in their relative market share in both the world and US markets between 1990 and 2002. They found that few Latin American economies actually had export profiles similar enough to China to be threatened by China, with the two exceptions of Mexico and Costa Rica. For those countries, they found that China’s threat was more of a perception than a reality (Lall & Weiss, 2005a). Lall and Weiss’s work calls for continued analysis in the case of Mexico. In the introduction to their paper, Lall & Weiss (2005a) argued that “our paper is thus a preliminary mapping that may offer insights for further, more detailed exploration”. Moreover, Lall and Weiss’s analysis was conducted just 1 year after China entered the World Trade Organization (WTO). In this note, we reproduce and complement their analysis by looking exclusively at the case of Mexico in light of China’s accession to the WTO in 2001. Our main aim was to evaluate whether or not Lall and Weiss’s findings on Mexico hold true when the examination is extended to include the period following China’s accession to theWTO.We found that in just 2 years, the vast majority of Mexico’s non-oil exports are now under “threat” as defined by Lall and Weiss.