THREE ESSAYS MEASURING THE EFFECTS OF CHINESE GROWTH IN LATIN AMERICA

This dissertation provides a greater understanding of the structural changes that the rapid economic growth of China has had on partner countries in Latin America. I have conducted three different analyses: one at the plant level, one at the industry level and one at the macroeconomic level. The first two studies seek the same objective of analyzing if at the microeconomic level competition with Chinese products has affected plant and industry outcomes. In the plant level analysis I evaluate effects of competition with Chinese products on plant productivity. In the industry level analysis I study if competition with Chinese imports displaces women from manufacturing jobs. In the third study I evaluate business cycle synchronization of the Latin American region and its main trade partners, paying particular attention to the potential structural shift in growth trends as a result of Chinese growth. In the following lines I provide more detail about each of the chapters. In the first chapter I analyze if competition with Chinese products increased plant productivity in the manufacturing sector of Chile during 1995-2006. I find evidence suggesting that during this period Chilean manufacturing plants that remained producing and were exposed to competition from Chinese products were more productive than exiting plants. However, I do not find that plants increase their productivity over time due to competition with China. The productivity differential with Chinese products between exiting and surviving plants with China may then be attributed to a level of efficiency of these plants prior to the onset of Chinese product competition. As a result, I find that plants are not improving due the Chinese competition but it is those plants that are productive enough the ones that manage to survive. In the second Chapter I measure if competition with Chinese imports has negatively affected female employment in the manufacturing sector of Chile during the period 1995-2006. My findings indicate that female employment as a share of total adult women has decreased as a result of this competition. This is not the case for the male employment which seems unaffected by competition with Chinese imports. Finally, in the third chapter I evaluate if there are differences in business cycle fluctuations in Latin American countries as China’s penetration in global markets has increased. I do this by dividing the latest 30 years of economic growth for the larger economies in Latin America and the main trade partners of the region (the US, the European Union and China) in two sub-periods: before and after the accession of China to the World Trade Organization. My findings suggest that after the Chinese accession to the World Trade Organization, a period that coincides with a greater penetration of China to global markets, international shocks are felt more strongly in Latin American countries than before. This result, together with the fact that I find evidence of Latin American countries and the main trade partners follow three different type of international shocks, suggests that one of these could be attributed to Chinese growth.