The Impact of Exports to China on Latin American Growth
23 Pages Posted: 7 Feb 2017
Date Written: December 1, 2016
This article analyzes the relationship between GDP growth in seven major Latin American countries and China’s demand for their exports. GLS panel estimation using annual data for the period 1994-2013 shows that the relationship was both statistically and economically significant. Control variables found to be significant in positively affecting GDP growth include the investment-to-output ratio, the exchange rate, and the terms of trade, and, in negatively affecting it, population growth and the unemployment rate. Consistent with recent literature, foreign direct investment was found not to be significant. A sharp drop in exports to China for many of the countries in the sample in 2015 raises questions about the region’s vulnerability to China’s growth slowdown.
Keywords: Trade Policy, Export-Led Growth, Foreign Direct Investment, Exchange Rate
JEL Classification: F14, F43, F21, F31
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