Exports to China and economic growth in Latin America, unequal effects within the region

Julio Arteaga (), Mónica Liseth Cardozo and Márcia Jucá T. Diniz

International Economics, 2020, issue 164, 1-17

Abstract: Most Latin American countries have intensified their economic relationships with China since 1990, and even more as a result of the admission of China to the World Trade Organization (WTO). Therefore, this article has two purposes: (1) to explore if exports to China have a different effect on Latin American economic growth than the effect of worldwide exports and (2) to analyze whether exports to China have a different impact on economic growth between South America and a group of countries comprising Mexico and Central American and Caribbean countries since their sources of comparative advantages are diverse. An export-led growth model that focuses on the effects on economic growth via productivity is estimated using panel data techniques and information from 1990 to 2017. Results show that exports to China have a different effect than worldwide exports on Latin American economic growth via productivity. Furthermore, this study provides a new contribution to the literature by showing that exports to China have a positive impact on South America but a negative impact on the group of Mexico, Central America, and the Caribbean for the period after China enters WTO. This result means that growth in exports to China intensifies the primary exporting character of South American countries.

Keywords: Export-led growth; Latin America; China; Productivity effect (search for similar items in EconPapers)
JEL-codes: C23 F14 F43 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepiie:2020-q4-164-1

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