China’s Direct Investment in Latin America

• In Event: Chinese Investment in Latin America

Abstract

China’s economic engagement with Latin America has grown rapidly over the past decade. Much of this is trade as China provides demand for Latin America’s primary exports. But China’s direct investment on the continent has grown as well. This paper employs China’s aggregate data on direct investment in each country as well as a unique micro data source of all Chinese enterprises investing in Latin American countries to investigate some of the common ideas about China’s investment. To what extent does the Chinese investment go beyond natural resources to manufacturing and service sectors? Is the investment concentrated in countries with poor governance indicators? How does the Chinese allocation across countries compare with overall FDI, which has come primarily from the Western advanced economies? Will the economic slowdown and market turmoil in China increase or decrease its capital outflow to emerging markets? Is China’s investment on the continent similar to or different from its direct investment in Asia and Africa? These are the main questions addressed by this study.

Author

• David Dollar