Chinese FDI and Latin America

When the fast money round in the popular game show Family Feud has globalization as one of the questions, “the survey says” …China! But can this help Latin America win the jackpot? That is an interesting question and here’s why…

While we were all watching China become an enormous supplier of manufacturing goods, technology components, and even services, China quietly tripled its Foreign Direct Investment in the past 6 years – from 4.2% to 13.9% of total stock. And although China has traditionally been regarded as a possible competitor for FDI with Latin America, the investor interest in Latin America’s natural resources is very different from that of China’s high productivity growth levels.

The article in theGlobalist further discusses how active policy making and leveraging comparative advantages can help Latin America maximize the financing opportunities offered by the growing Chinese investment abroad. Business leaders in Latin America have already started thinking about higher levels of regional trade. Such thinking can be taken a step further by exploiting regional market networks and cultural advantages as a stimulus for Chinese investment. However, Latin America will need to avoid excessive specialization on natural resources and adapt to new strategies to seize the opportunities brought about by China’s rise. I guess the question is…will Latin America be quick and smart in this “game” and be able to win the jackpot?