Latin dragon
The Visible Hand of China in Latin America
Latin America is looking towards China and Asia–and China and Asia are looking right back. This is a major shift. For the first time in its history, Latin America can benefit from not one but three major engines of world growth.
Until the 1980s, the US was Latin America’s major trade partner. In the 1990s, trade in the region profited from the European investment boom. Now the emergence of Asia, and in particular China, has the potential to act as a third engine of growth, as it seeks resources and new markets.This means both opportunities as well as challenges, says The Visible Hand of China in Latin America, recently published by the OECD Development Centre. “Angel or Devil?” asks one chapter, addressing China’s trade impact on Latin America’s emerging markets. Another looks at how Latin America is “competing with the dragon”, comparing Latin American and Chinese exports to the US market. It also discusses China’s impact on foreign direct investment in these countries. Chinese growth has most certainly been favourable to Latin America, if only because China is such a powerful source of world economic growth. The country’s expanded markets and better export prices, especially for primary goods, are an important source of revenue for Latin America. Yet China is forcing Latin America rapidly to restructure some of its productive sectors in order to defend its position in international markets.China and Latin America have intensively developed their trade relations over the past decade. Trade volume rose from $2 billion in the early 1990s to $15 billion in 2001.
While foreign direct investment to Latin America has been tumbling during the early 2000s, FDI towards China soared. For Europe and the US, China’s “visible hand in Latin America” is also a wake-up call. ISBN: 9789264028388OECD Observer No 261, May 2007
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