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South America for the Chinese?: A Trade-Based Analysis

Author

Listed:
  • Eliana Cardoso

    (World Bank)

  • Márcio Holland

    (Fundacao Getulio Vargas)

Abstract

The case for a natural resource curse is based on the argument that in the absence of challenges, there is no progress. Is South America cursed by its natural resources? Does China’s rapid penetration of the region renew the region’s comparative advantage in natural resources? Does South America’s trade specialisation stand in the way of regional integration? This paper tries to answer these questions in five steps: It begins with an analysis of trade flows to demonstrate China’s growing importance in South America. It verifies that China’s emergence as an important partner to the region reinforces the long-established calling of its countries as natural resources and commodities exporters. It argues that this vocation matters, because there is a link between the behaviour of the price of commodities and the region’s economic performance. It claims that to deal with this relationship, the best policy is the use of a counter cyclical fiscal policy. Finally, the paper examines whether Brazil could serve as a counter weight to China’s influence in the region. By examining the experience of Mercosur, it concludes that this seems improbable, in part because all countries of the region share the same comparative advantages in producing commodities and agricultural goods. L’argument en faveur d’une malédiction des ressources naturelles s’appuie sur l’idée qu’en l’absence de défi, le progrès n’est pas possible. L’Amérique latine est-elle victime d’une malédiction liée | l’abondance de ses ressources naturelles ? La pénétration rapide de la Chine sur le marché régional relance-t-elle l’avantage comparatif de la région en matière de ressources naturelles ? La spécialisation commerciale de l’Amérique latine va-t-elle dans le sens de l’intégration régionale ? Ce papier tente de répondre à ces questions en suivant cinq étapes : Il commence par une analyse des flux commerciaux pour montrer l’importance croissante de la Chine en Amérique latine. Il constate que l’émergence de la Chine en tant que partenaire majeur de la région renforce la vocation établie d’exportateurs de matières premières et de ressources naturelles de ses pays. Il insiste sur l’importance de cette spécificité puisque il existe un lien direct entre l’évolution du prix des matières premières et la performance économique de la région. Il affirme que le recours à une politique fiscal contre-cyclique est la meilleure politique pour contrôler l’effet de cette relation de dépendance. Enfin, le papier s’interroge sur la place du Brésil dans la région et sa capacité à jouer le rôle de contrepoids face à l’influence de la Chine. En revenant sur l’expérience du Mercosur, il conclut que cela semble improbable, en partie à cause du fait que tous les pays de la région possèdent les mêmes avantages comparatifs dans la production de matières premières et de produits agricoles.

Suggested Citation

  • Eliana Cardoso & Márcio Holland, 2010. "South America for the Chinese?: A Trade-Based Analysis," OECD Development Centre Working Papers 289, OECD Publishing.
  • Handle: RePEc:oec:devaaa:289-en
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    File URL: http://dx.doi.org/10.1787/5kmh5gs82q0v-en
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    Cited by:

    1. Barbi, Fernando & Holland, Márcio, 2010. "China na América Latina: uma análise da perspectiva dos investimentos diretos estrangeiros," Coediciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1402, May.
    2. Pereira, Jaime Marques, 2012. "La monnaie, la politique et la possibilité d’un mode de développement à nouveau fondé sur le marché intérieur au Brésil et en Argentine," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 11.

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