The Visible Hand of China in Latin America
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The Visible Hand of China in Latin America

Latin America is looking towards China and Asia -- and China and Asia are looking right back. This is a major shift: for the first time in its history, Latin America can benefit from not one but three major engines of world growth. Until the 1980s, the United States was the region’s major trade partner. In the 1990s, a second growth engine emerged with the European investment boom in Latin America. Now, at the dawn of the new century, the increasing global economic importance of Asia, and in particular China, potentially provides a third engine of growth.

This book describes the opportunities and challenges that Latin American economies will face as Chinese importance in the world economy -- and in Latin America's traditional markets -- continues to grow.

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Chapter
 

Should Latin America Fear China? You or your institution have access to this content

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Author(s):
Eduardo Lora

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This chapter compares growth conditions in China and Latin America to assess fears that China will displace Latin America in the coming decades. China’s strengths include the size of the economy, macroeconomic stability, abundant low-cost labour, the rapid expansion of physical infrastructure and the ability to innovate. Its weaknesses stem from insufficient separation between market and state. They involve poor corporate governance, a fragile financial system and misallocation of savings. Both regions also share important weaknesses. The rule of law is weak, corruption is endemic and education is both poor and very poorly distributed.
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