Evaluating China's role in contemporary South American trade - an economic complexity approach

Linus Zechlin and Moritz Marpe

No 241/2024, IPE Working Papers from Berlin School of Economics and Law, Institute for International Political Economy (IPE)

Abstract: The rapidly expanding importance of the Chinese economy saw a restructuring of the global trade hierarchy. While this proves challenging for all economic actors, especially peripheral economies are forced to rethink the way they interact and trade with the new emerging economy (EME) powerhouse that is China. In this article, we pay closer attention to the South American (SAC) economies and their specific industrial composition that arguably left them in an unequal relationship with China, placing them in a precarious situation of dependency on low-complexity commodities. Utilising the theoretical framework of economic complexity, we thoroughly assess this asymmetric relationship between SAC and China. Causal linkages are further created by including the findings from this descriptive examination into a structural gravity model of trade. We find that the complexity approach underlines the notion of asymmetry in the Chinese-SAC trade nexus and places the latter in a so-called quiescence trap, a disposition which could be outgrown by a significant increase in productive capabilities. The econometric analysis reinforces this, urging additional research on other developing and emerging economies.

Keywords: International Trade; Economic Complexity; Gravity Theory; China; South America (search for similar items in EconPapers)
JEL-codes: F10 F14 O53 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-int
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