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Déjà VU: Latin America and Its New Trade Dependency … This Time with China

Published online by Cambridge University Press:  05 September 2022

Jaime Ortiz
Jaime Ortiz*
Affiliation:
Texas International Education Consortium
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Abstract

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This article examines the sources of economic growth for a group of Latin American countries in relation to their export performance in China. The analytical framework is based on an extended normalized quadratic profit function. The econometric results confirm that a favorable export record with China represents a positive source of growth for Latin America. However, it also creates long-run dependability conditions in terms of reduced prices and thinner profits that weaken its growth capacity. Latin American countries must seek product diversification away from their current commodity base and aggressively climb up the value chain to remain competitive worldwide.

Resumo

Resumo

Este artículo examina las fuentes de crecimiento económico para un grupo de países latinoamericanos en relación a su desempeño exportador con respecto a China. El marco analítico está basado en una función cuadrática normalizada de beneficios. Los resultados econométricos confirman que un favorable record exportador hacia China representa una fuente positiva de crecimiento para América Latina. No obstante, también crea condiciones de dependencia de largo plazo en términos de precios reducidos y utilidades menores que debilitan su capacidad de crecimiento. Los países latinoamericanos deben apuntarse hacia una diversificación productiva distinta a su actual base exportadora y escalar agresivamente la cadena de valor a fin de permanecer mundialmente competitivos.

Type
Research Reports and Notes
Information
Latin American Research Review , Volume 47 , Issue 3 , 2012 , pp. 175 - 190
Copyright
Copyright © 2012 by the Latin American Studies Association

Footnotes

I gratefully acknowledge the insightful comments and valuable suggestions made by LARR's editor and its external reviewers.

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