China's Competitive Threat to Latin America: An Analysis for 1990-2002

This paper explores China's competitive threat to Latin America in trade in manufactured goods. The direct threat to exports to third country markets appears small: Latin America and the Caribbean's (LAC's) trade structure is largely complementary to that of China. In bilateral trade, several LAC countries are increasing primary and resource-based exports to China. However, the pattern of trade, with LAC specializing increasingly in resource-based products and China in manufactured goods, seems worrying. Given cumulative capability building, China's success in increasingly technology-based products with strong learning externalities can place it on a higher growth path than specialization in "simpler" goods, as in LAC. China may thus affect LAC's technological upgrading in exports and industrial production. The issue is not so much current competition as the "spaces" open for LAC in the emerging technology-based world.