Recent China-LAC Trade Relations Implications for Inequality?

Abstract

ABSTRACT. In the last decade, the socioeconomic relationship between Latin America and the Caribbean (LAC) and the People's Republic of China has increased massively. How has this new qualitative relationship between LAC and China affected inequality in LAC? This paper highlights the degrees of concentration of trade since the 1990s until 2011 and its technological content. Future research will have to deepen this relationship at the national, regional and even firm-level. Based on a brief critical review of the relationship between trade and equality/inequality, the document analyzes several of the outstanding features of the booming trade relationship between LAC and China. It concludes, among other issues, that both academics and policy makers have to overcome the bias against the agricultural sector and natural resources based on the concepts of global commodity chains, systemic competitiveness and territorial endogeneity. In addition, one of the most striking features of the new LAC-China trade is its increasing concentration, both compared with historical levels of LAC-China trade, as well as with the rest of the world, a development that will affect inequality in LAC substantially. It is not old wine in new bottles, but rather a new socioeconomic relationship with dynamic and profound impacts in LAC that will have to be considered in more detail by scholars and policy makers in the future.Keywords: Latin America, China, trade, concentration, inequality1. IntroductionIn the last decade, the socioeconomic relationship between Latin America and the Caribbean (LAC) and the People's Republic of China (referred to hereafter as China) has increased massively. As we will see in what follows, this new relationship has grown far beyond economics (and specifically trade), but also into such areas as investments, policies (bilateral and multilateral), culture, education and language, among others. So far, however, the most significant part of this new relationship has occurred in a first stage: the booming trade since the mid-1990s in all of LAC without any exception. As we shall see, this new relationship with China has generated new opportunities and challenges at different levels that will require responses from the public, private and academic sectors. This relationship also has tremendous implications for equality.In the prior context, this document will focus on the characteristics of the new trade relationship between LAC and China and its technology and concentration features. Behind this analysis there is the explicit understanding that trade affects equality (or inequality) of a range of issues - from wages and employment to GDP, income and consumption forms at the individual, household and regional and national level, among others - depending on the specific characteristics of trade. While there is an increasing literature in LAC and other parts of the world on the importance of LAC-China trade, there is little research on the specificities of this trade and its potential effects on equality/inequality. For understanding these effects, the paper's contribution will highlight the degrees of concentration of trade - both imports and exports - since the 1990s and until 2011 and its technological content. Future research will have to deepen the effects on equality of this trade relationship at the national, regional and even firm-level. Nevertheless, as we shall see, there are significant results based on this type of analysis.As a result, the document will be divided in four sections. After this introduction, the second section will briefly examine, first, the discussion of equality, inequality and polarization in LAC in the literature, and, second, on the new qualitative challenges based on the LAC-China relationship. The third part will examine in detail the trade relationship between LAC and China and analyze the concentration and technology characteristics between LAC and China during 1990-2011. …