Development Drivers and Limitations
Global Development Network series
Edited by Natalia Dinello and Shaoguang Wang
Roberto Álvarez and Sebastián Claro After decades of autarky, Chinese exports have grown vigorously – especially since the 1990s – making China one of the most important trading partners in the world. This phenomenon has generated a growing literature which analyzes the potential impact of Chinese competition on third countries, especially in labor-intensive industries where China’s exports are dominant. Although there are some descriptive and illustrative works discussing the potential impact of China (Devlin, Estevadeordal and Rodriguéz 2006; Blásquez-Lidoy, Rodriguéz and Santiso 2006), only a few works have studied this phenomenon in detail. Some papers have focused on the impact on other Asian countries’ exports (Eichengreen, Rhee and Tong 2004) while others have analyzed the relative effects on Latin American exports to a third market (López-Córdova, Micco and Molina 2008). There are also some recent works on the potential effects Chinese imports could have on competition among domestic industries. Alvarez and Claro (2008) study whether Chilean manufacturing plants have been negatively affected by Chinese competition or if they have been able to adjust through changes in the product mix and exports.1 Contrary to the evidence of Bernard, Jensen and Schott (2006), who show that US manufacturing firms have escaped import competition from low-wage countries by improving quality, the evidence for Chile suggests that the potential for upgrading is much smaller, meaning that domestic firms have shrunk in response to low-wage import competition. However, a detailed study of the impact of Chinese competition on other economies requires...
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