Abstract
In tandem with China’s national strategy of the Belt and Road Initiative, China has become a key player in Latin America’s economic development due to its economic relations with the region in trade, foreign direct investment (FDI), and loan commitments. At the same time, a critical issue in the development of Latin America has been its historically high levels of income inequality, which has underlined the social, political, and economic instabilities in the region. While the development model of China has created certain implications for income inequality within China, it will be equally important to find out if this new growing economic relationship between China and Latin America, in the context of the Belt and Road Initiative, has influenced inequality and poverty in the region. Our central thesis in this study is around the effects of China’s engagement with Latin America on its income distribution and poverty levels. To account for Chinese investment and trade with Latin America, we used imports from China, exports to China, Chinese FDI, and Chinese loan commitments as theoretical variables. Our findings show that China plays a limited yet somewhat positive role in mitigating inequality in Latin America, mainly through imports from China. In the case of exports to China and FDI, we found insignificant effects on income inequality and poverty. Finally, we did not find the effect of Chinese loans on the reduction of poverty and income inequality in the region.
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
KEYWORDS
Latin America, China, Trade, Investment, Loans, Income Distribution, Poverty Reduction
