Transcript Kevin Gallagher and Rebecca Ray Presentation

China and Latin America:
Implications for Sustainable Development
Kevin Gallagher and Rebecca Ray
Boston University
March 25, 2014
Boston
University
Global Economic
Governance Initiative
Outline
• Background
• Project Description
• Preliminary Project Results
LAC-China Economic Activity
Major Benefits
• Increased trade—
– large and growing with price impacts
• Increased FDI from China
– large and growing
• Major source of finance
LAC-China Exports: $131B (2012)
China’s Importance as an Export Destination, by Commodity Sector
Exports to China as a Shrae of All Exports
17.5%
Total Exports
Manufactured Products
Primary-Based Products and Crude Petroleum
15.0%
13.2% 13.3%
12.5%
11.4%
10.0%
8.9%
7.6%
7.5%
5.0%
2.5%
15.3%
3.7%
5.8%
5.8%
5.3%
5.6%
3.3%
3.4%
3.7%
3.7%
1.8%
1.3%
1.6%
2003
2004
2005
2.2%
1.1%
5.2%
4.9%
1.6%
1.7%
1.4%
2006
2007
2008
9.1%
8.2%
8.5%
2.1%
1.8%
1.8%
2.1%
2009
2010
2011
2012
7.1%
0.0%
2002
Note: Categories are defined using Sanjaya Lall’s “Technological Classification of Exports” (Lall, 2000).
Source: UN COMTRADE and authors’ calculations.
LAC-China Exports
Top Commodities, 2008-2012
Sector
Share
Country share of LAC-China exports, each sector
Iron ore, concentrates
22.1% Brazil (86%)
Soybeans, other oilseeds
14.7% Brazil (67%), Argentina (28%)
Crude petroleum
11.9% Venezuela (46%), Brazil (29%), Colombia (10%)
Refined copper
10.9% Chile (92%)
Copper ores, concentrates
6.9% Chile (51%), Peru (32%), Mexico (13%)
Transistors and valves
5.1% Costa Rica (82%), Mexico (17%)
TOTAL:
71.6
%
Source: UN COMTRADE and authors’ calculations.
Chinese Greenfield FDI in LAC-$30-50B
Share of all GFDI inflows to LAC, by sector
Percent of Total Greenfield Inflowsto LAC
7.5%
5.0%
Total from China:
Food, Tobacco
Automo ve OEM
Metals
Coal, Oil, Natural Gas
Communica ons
Other
6.3%
5.9%
1.2%
5.4%
0.4%
5.0%
1.0%
1.7%
2.9%
2.9%
2.5%
1.7%
0.0%
1.3%
0.2%
2003
2.6%
2004
0.8%
1.3%
2.2%
0.8%
2005
2006
Source: FDI Markets and authors’ calculations.
2.7%
3.2%
1.9%
3.6%
1.1%
0.4%
1.5%
2.8%
1.1%
0.4%
0.3%
1.2%
0.9%
1.3%
1.4%
2011
2012
0.8%
0.4%
0.4%
0.5%
0.2%
0.7%
2007
2008
2009
2010
0.3%
Chinese Financing: $100b (2003-2013)
Distribution by sector, 2008-2013
Transporta on,
12.7
Communica ons,
1.7
Energy, 17.5
Mining, 4.2
Tourism, 2.5
Other
Infrastructure, 24.2
Housing
4.1
Discre onary, 12.5
Source: Gallagher et al, 2012
.
Other Industry, 0.1
Trade Financing,
1.8
Working Group on Development and Environment
• To what extent is Chinese trade, investment and
finance a driver of environment and social change
in Latin America?
• To what extent are Chinese actors in LAC different
in their environmental and social behavior than
other foreign and domestic firms?
• What policies can LAC governments engage at the
national, bi-lateral, and regional levels to mitigate
the costs of commodity-led growth.
Country Studies
Trade and finance
•
•
•
•
Brazil--soy
Colombia—coal
Bolivia—tin, lithium?
Argentina—oil, shale?
Investment, trade,
finance
• Peru—copper, iron
• Ecuador—oil, hydro
• Mexico—
manufacturing, oil?
Preliminary Findings
• Chinese trade and investment is a strong new
source of trade, finance, and growth for LAC
• Concentrated in primary commodity sectors
– susceptible to boom and bust cycles
– endemic to environmental degradation
– (often) geographically located in indigenous areas
• Key challenge is for LAC to maximize the
benefits of booms mitigate associated risks.
LAC-China Trade is Different
More Primary-based than all LAC exports, all China imports
100%
Primary
90%
Manufactured
33.7%
80%
56.0%
70%
60%
Other
86.4%
50%
40%
63.4%
30%
39.7%
20%
10%
0%
13.3%
0.2%
LAC Exports to China
4.3%
2.9%
All LAC Exports
All China Imports
Note: Categories are defined using Sanjaya Lall’s “Technological Classification of Exports” (Lall, 2000).
Source: UN COMTRADE and authors’ calculations.
LAC-China Trade & GHG Emissions
LAC-China exports are more GHG emissions-intensive
2
1.89
kg CO2 equivalent per USD
1.67
1.5
1.152
1
0.5
0
GDP
All exports
Source: Peters et Al 2011, UN Comtrade, authors’ calculations.
Exports to China
LAC-China Trade & GHG Emissions
Growth in LAC GHG Emissions, by Source
700
Emissions from GDP
650
Emissions from Exports
Index: 2002=100
600
597
Emissions from Exports to China
547
500
453
412
400
344
300
252
206
200
162
108
100
2002
223
118
126
102
108
112
2003
2004
2005
128
134
137
127
118
124
129
127
2006
2007
2008
2009
Source: Peters et Al 2011, UN Comtrade, authors’ calculations.
140
146
150
133
139
143
2010
2011
2012
LAC-China Trade & GHG Emissions
Export Sectors, by GHG Intensity
All Exports
.
Exports to China .
Exports to R.o.W. .
2002
2012
2002
2012
2002
2012
Ranching (10.3)
1.8%
4.1%
4.4%
5.3%
1.8%
4.0%
Fossil Fuel refining /dist. (3.6)
4.7%
4.0%
0.4%
2.9%
4.8%
4.1%
Farming, forestry, fishing (2.0)
14.9%
22.3%
33.9%
27.4%
14.5%
21.9%
Metal/mineral mining (1.9)
11.0%
14.2%
30.5%
35.7%
10.6%
12.5%
Fossil fueil extraction (1.5)
14.2%
14.6%
0.1%
14.4%
14.5%
14.6%
Manufacturing (0.8)
52.1%
39.3%
30.3%
14.0%
52.5%
41.3%
1.2%
1.5%
0.5%
0.3%
1.3%
1.6%
32.5%
44.6%
69.1%
71.3%
31.7%
42.5%
Not specified
Most GHG - intensive
Source: Peters et Al 2011, UN Comtrade, authors’ calculations.
China-LAC GFDI & GHG Emissions
By sectors (and GHG Intensity)
Sector (CO2/USD):
8.0%
Percent of Total, 2003-2012
18.0%
18.4%
Commerce, bus svcs (0.4)
Construc on (0.5)
36.4%
Public administra on (0.8)
31.8%
31.6%
6.2%
Manufacturing (0.8)
Fossil Fuel Extr. (1.5)
10.2%
10.3%
23.5%
Metal/mineral mining (1.9)
Farming, fishing, forestry (2.0)
20.6%
20.5%
18.0%
Transport (2.8)
Fossil fuel refining/distr. (3.6)
13.8%
0.1%
7.6%
14.0%
All GFDI
GFDI from China
GFDI from R.o.W.
Source: Peters et Al 2011, FDI Markets, authors’ calculations.
Ranching (10.3)
LatAm-China Trade & Jobs
LAC-China exports are low in labor intensity – and falling
Source: CEPAL, WDI, UN COMTRADE, and authors’ calculations.
LatAm-China Trade & Jobs
Extraction supports far fewer jobs than other sectors per million USD
Jobs Supported by Each Real (2002) US$1 Million in Exports:
Argentina
Bolivia
Brazil
Chile
Colombia
Ecuador
Mexico
Peru
Latin America
Agriculture
30.3
153.2
76.1
57.5
48.6
48.8
70.6
80.3
Extraction
9.8
89.2
0.0
30.0
33.9
21.8
1.5
36.7
60.1
11.6
Source: CEPAL, WDI, UN COMTRADE, and authors’ calculations.
Manufacturing
66.8
366.5
146.6
59.7
142.4
110.9
54.2
113.7
71.8
LatAm-China Trade & Jobs
Extraction supports far fewer jobs than other sectors per million USD
Jobs Supported by Each Real (2002) US$1 Million in Exports:
Argentina
Bolivia
Brazil
Chile
Colombia
Ecuador
Mexico
Peru
Latin America
Agriculture
30.3
153.2
76.1
57.5
48.6
48.8
70.6
80.3
Extraction
9.8
89.2
0.0
30.0
33.9
21.8
1.5
36.7
60.1
11.6
Source: CEPAL, WDI, UN COMTRADE, and authors’ calculations.
Manufacturing
66.8
366.5
146.6
59.7
142.4
110.9
54.2
113.7
71.8
LatAm-China Trade & Jobs
Source of new export-related jobs, 2002-2012, by sector and export market
Millions of Jobs:
Agriculture
Mining, Extraction
Manufacturing
Other
Total:
World
China
0.96
0.63
5.18
-0.02
6.75
0.33
0.19
0.29
0.00
0.81
0.64
0.44
4.88
-0.02
5.95
4.8%
2.7%
4.4%
0.0%
11.9%
9.5%
6.6%
72.3%
-0.3%
88.1%
Percent of New Export-Related Jobs:
Agriculture
14.3%
Mining, Extraction
9.3%
Manufacturing
76.7%
Other
-0.3%
Total:
100.0%
Source: CEPAL, WDI, UN COMTRADE, and authors’ calculations.
Rest of World
Are Chinese firms different?
• Invest in different basket of commodities
• Different and more favorable sources of
finance
• Finance has weaker social and environmental
norms
• May be faster learners than their counterparts
in the past…
Shougang - Marcona
Old and New Morococha
Burden to balance risk and reward:
LAC States
• LAC nations have significant leverage
– location specific assets
– China’s concern about its brand and image.
– Not as much for nations without alternatives.
• LAC are struggling with the balance between
growth, social concerns, and environment.
– CSOs can often help identify risk and pressure
governments and firms by agenda setting and holding
actors accountable.
– Commodity booms also empower ‘extractivist’ interest
groups that can pressure government to ignore risks—
busts harder to regulate.
Chinese firms/state
has a role too
• China also has a role to play in meeting global norms
for sustainability.
• Chinese state is developing guidelines for firms and
finance.
• China is already engaging in many JVs to ‘learn’ on
logistics and perhaps environmental and social issues
can be an area for cooperation as well.
• Despite weaker regulations and institutional capacity in
mainland China, with proper incentives Chinese firms
prove they can climb the learning curve quickly to
meet norms.
• States and CSOs need to set the incentives right and
hold the private sector accountable.
Plurilateral forums?
• Many countries are developing strong bilateral relationships with China and these
issues need to ‘rise’ to that level.
• China has begun to engage with the BID,
CELAC, CEPAL and other sub-regional forums
such as Mercosur. Are these ‘entry points’ for
policy dialogue?
• Transnational CSO advocacy networks
Peru as Laboratory
Peru is ahead
•
•
•
•
EITI
EIAs with community
ILO 169
CSO accountability and
transnational networks
• Chinalco model?
• UP Centro Estudios PeruChina
Peru is Behind
• Managing booms and busts
– Stabilization funds, SWF?
• Incentivizing complimentary
economic activity to mining
– Development banking?
– Trade agreements
• Building human capital
– China experts, cooperation
with Chinese firms and
government on education
THANK YOU