Where China Meets Latin America: Implications for Economic Growth

摘要

This paper 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 ensuing 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.