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Fear of China : is there a future for manufacturing in Latin America ?

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  • Mauricio Mesquita Moreira

    (Instituto para la Integración de América Latina y el Caribe, INTAL)

Abstract

China’s emergence has raised pointed questions about the future of manufacturing in Latin America. Once saw as its economic future, the viability of this activity in the region has long been challenged by traditional trade theory and, in practical terms, by at least three generations of Asian Tigers. China and its “unlimited supply of labor”, rapid productivity growth, scale, and extremely interventionist state has brought the practical challenge to unprecedented levels. This paper, using mainly descriptive production and trade statistics, looks at the nature of this challenge and its implications. It begins by dealing with a central issue: Does manufacturing still matter for Latin America’s development? It argues that even though there are other options that should be exploited, the region cannot afford to completely turn its back to a well-proven road to development. It then moves on to examine the scope and nature of the Chinese challenge. It shows that endowments, productivity, scale and the government role, all work together to make China a formidable competitor. The importance of this challenge is confirmed by an analysis of the trade data, which suggests a small impact so far, but a trend that should make Latin American policy makers uncomfortable in their seats. The paper concludes by discussing, in general terms, the (difficult) policy options available.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Mauricio Mesquita Moreira, 2006. "Fear of China : is there a future for manufacturing in Latin America ?," INTAL Working Papers 1278, Inter-American Development Bank, INTAL.
  • Handle: RePEc:idb:intalp:1278
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    More about this item

    Keywords

    ACCESO A LOS MERCADOS; EXPORTACIONES; SECTOR INDUSTRIAL; COMERCIO INTERNACIONAL;
    All these keywords.

    JEL classification:

    • F00 - International Economics - - General - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L - Industrial Organization

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