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The Dragon in the Room
China and the Future of Latin American Industrialization
By Kevin P. Gallagher and Roberto Porzecanski
Stanford University Press, 2010
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In the eyes of many, China's unprecedented economic rise has brought nothing but good news to the countries of Latin America and the Caribbean. Indeed, China's growing appetite for primary products, and the ability of Latin America to supply that demand, has played a role in restoring growth in Latin America, both in the run-up to the global financial crisis and in its aftermath.
The dragon in the room that few are talking about is the fact that China is simultaneously out-competing Latin American manufacturers in world markets—so much so that it may threaten the ability of the region to generate long-term economic growth. One of the authors' key findings is that China is rapidly building the technological capabilities necessary for industrial development, whereas Latin American tech innovation and sophistication lags considerably. At a deeper level, the findings in this volume imply that China's road to globalization, one that emphasizes gradualism and coordinated macro-economic and industrial policies, is far superior to the "Washington Consensus" route taken by most Latin American nations, particularly Mexico.
For updated figures and the policy implications of The Dragon in the Room, read this Policy Brief
For more on China and Latin America
Kevin P. Gallagher is a senior researcher at the Global Development and Environment Institute at associate professor of international relations at Boston University. He is the author of The Enclave Economy: Foreign Investment and Sustainable Development in Mexico’s Silicon Valley, and Free Trade and the Environment: Mexico, NAFTA, and Beyond. He writes regular columns for The Guardian and Financial Times.
Roberto Porzecanski is a research fellow at the Global Development and Environment Institute and author of the book, Not On Board:Uruguay and the Prospects for a Free Trade Agreement with the United States.
The Global Development and Environment Institute’s Globalization and Sustainable Development Program examines the economic, social and environmental impacts of economic integration in developing countries, with a particular emphasis on the WTO and NAFTA's lessons for trade and development policy. The goal of the program is to identify policies and international agreements that foster sustainable development.