(The) effect of emergence of China on trade specialization in Latin American and ASEAN countries

Abstract

The rapid growth of Chinese exports has raised much controversy of its competitive threat for other developing countries. Therefore, this thesis focuses particularly on the impact of China on the trade specialization of two developing regions, ASEAN and LA countries, and sets out to answer following questions. First, to what extent do these selected regions have changed their trade specialization patterns as a consequence of the emergence of China in global economy and which countries within the region are most affected by? Second, are China and ASEAN (or LAC) competing with each other in same sectors and if so, how did the competition increase or change over time? Third, how does Latin America experience compare to that of ASEAN? The empirical analyses explore the correlation between the RCAs of China and that of two regions. The results suggest that LACs specialization patterns—with the exception of Mexico—has been moving in opposite direction to that of China. Given the large demand of China, LAC countries have increased their exports on primary goods recently. China may thus affect LACs technological upgrading in industrial sector. In the case of ASEAN countries, Indonesia, Thailand and Malaysia, to some extent, have become the exporters of primary products because of China while the others are maintaining their level of industrialization.