Chinese growth creates opportunities for Latin America – World Bank

21 September 2006

Sao Paulo, Brazil, 21 Sept – Expansion of the Chinese and Indian economies is positive for Latin America and creates investment opportunities in the region, according to a World Bank study published this week.

Among other benefits Asian growth boosts demand for basic products such as soya and South American copper, also allowing countries in the Caribbean and Latin America to buy cheaper products from China and India, the study says.

The belief that the two emerging Asian economies are a threat to Latin America in world markets is, therefore, mistaken, says the World Bank report entitled Latin America and the Caribbean’s Response to the Growth of China and India: Overview of Research Findings and Policy Implications.

“Strong Growth in China and India do not represent a zero-sum game for Latin America and the Caribbean”, said Guillermo Perry, the World Bank’s chief economist for the region and one of the report’s authors.

“In a general manner the regional effects of the larger presence of the two Asian economies has been positive, but the countries in the region are still not obtaining all the benefits from rapid growth of markets in China and India,” added Perry.

While highlighting regional benefits, the World Bank also identifies some economic sectors and sub-regions feeling a negative impact from rapid expansion in China and India, particularly Mexico and Central America. Affected sectors are electrical machinery the electronic industry, transport machinery and textiles.

However, the World Bank report recommends that Latin American states do not resort to protectionism to safeguard their industries.

“Instead of responding to these challenges with protectionist policies, the region should adopt offensive strategies to benefit from the positive effects”, Perry said.

Besides education and innovation, the report suggests that Latin American and Caribbean governments support policies facilitating rural development and industries based on natural resources to improve the response of economies to price rises and climbing demand for basic products. (macauhub)