Trade and Investment in Latin America
 and Asia: Lessons from the Past and
  Potential Perspectives from Further
         ...
Trade and Investment in Latin America and Asia

• Growth performance of both regions
• Structural reforms, in particular o...
Trade and Investment in Latin America and Asia

• Structure of the presentation
      • A. Institutional point of view
   ...
Trade and Investment in Latin America and Asia

• A. Institutional point of view
      • Both regions: from import substit...
Trade and Investment in Latin America and Asia

• Proliferation of RTAs worldwide
• … and especially in Asia and LA
• In A...
Trade and Investment in Latin America and Asia




INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Trade and Investment in Latin America and Asia

• 91 RTAs currently in effect involving at least LA
  countries
• Majority...
Trade and Investment in Latin America and Asia




INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Trade and Investment in Latin America and Asia

• Trade and investment relations between the two
  regions
• Relatively ne...
Trade and Investment in Latin America and Asia

• Trade openness (Exports+Imports)/GDP

0.80


0.70


0.60


0.50


0.40

...
Trade and Investment in Latin America and Asia

• Share of exports to the region, Asia

0.90


0.80


0.70


0.60


0.50

...
Trade and Investment in Latin America and Asia

• Share of exports to the region, Latin America
0.40


0.35


0.30


0.25
...
Trade and Investment in Latin America and Asia

• Structure of exports, Asia

 100%

  90%

  80%

  70%

  60%

  50%

  ...
Trade and Investment in Latin America and Asia

• Structure of exports, Latin America

100%

90%

80%

70%

60%

50%

40%
...
Trade and Investment in Latin America and Asia

• Aggregate Intra-Industry Trade Index

 0.9


 0.8


 0.7


 0.6


 0.5
 ...
Trade and Investment in Latin America and Asia

• Top three Revealed Comparative Advantages by
  HS2 Chapter – 2007
•    (...
Trade and Investment in Latin America and Asia

• Top three Revealed Comparative Advantages by
  HS2 Chapter – 2007
•    (...
Trade and Investment in Latin America and Asia
• Rate of protection applied on imports, average 1995-1998 and 2005-
  2008...
Trade and Investment in Latin America and Asia
•      Rate of protection applied on agric. imports, avrge 1995-1998 and 20...
Trade and Investment in Latin America and Asia
•      Rate of protection faced by exports, average 2005-2008


0.70


0.60...
Trade and Investment in Latin America and Asia

• Main findings
      • Proliferation of RTAs, cross regional since 2004, ...
Trade and Investment in Latin America and Asia

• Large economies (China, India, Brazil,
  Argentina…)
• Complementary pat...
POTENTIAL IMPACTS OF AN
  ASIA-LAC FTA

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
• Implementation between 2010 and 2015
• Potential Impacts in 2020
      • May not be a realistic FTA:
         • all prod...
Some innovations


• Consistent Tariff Aggregator
      • Anderson (2009), Laborde (2008) and Laborde,
        Martin and ...
Modeling FDI (1)


Households                                     Firms
                            Simultaneous
         ...
Modeling FDI (2)

• Links between FTA, BIT and FDI
      • Dilution effects?


• Links between Trade, FDI and Trade costs
...
Real income - % changes compared to the baseline by
                          2020
 3.00
                           Basic ...
Real income, % changes compared to the baseline




       0.02
       0.01
       0.00
      -0.01
      -0.02
      -0.0...
With or Without Rich Asian countries, Real Income
                    variations
    2.00                         Large FT...
Export variations, % changes compared to baseline

     16.00
                                               No FDI + Larg...
-10.00
                                                                                                                   ...
Inwards FDI (baseline =1)

 1.25
  1.2
 1.15
  1.1
 1.05
    1
 0.95                                          Large FTA
  ...
Outwards FDI (baseline =1)
   1.2
 1.15
   1.1
 1.05
      1
                                               Large FTA
 0.9...
Upcoming SlideShare
Loading in...5
×

Trade and Investment between Asia and Latin America: Lessons and opportunities

1,626

Published on

Trade and investments policies by Asian and Latin America countries. Evolutions and potential gains from deeper integration between both regions.

Presentation done in Lima, Peru, 24th March 2010 during the “Fostering Growth and Reducing Poverty and Hunger in Asia And Latin America: Opportunities for Mutual Learning” Conference organized by IFPRI and Universtad del Pacifico

More information on the conference and additional materials on http://ifprilima09.wordpress.com/presentations/

Published in: Education
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,626
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
43
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Trade and Investment between Asia and Latin America: Lessons and opportunities

  1. 1. Trade and Investment in Latin America and Asia: Lessons from the Past and Potential Perspectives from Further Integration Antoine Bouet (a.bouet@cgiar.org) & David Laborde (d.laborde@cgiar.org) Valdete Berisha-Krasniqi & Carmen Estrades IFPRI Lima, March 23rd 2010
  2. 2. Trade and Investment in Latin America and Asia • Growth performance of both regions • Structural reforms, in particular on trade • These regions are so different • RTAs are multiplying all over the world • South-South Cross Regional RTAs are unusual, at least before 2004 • New RTAs cover trade… and investment • Building blocks vs. stumbling blocks INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  3. 3. Trade and Investment in Latin America and Asia • Structure of the presentation • A. Institutional point of view • B. Trade and Policy characteristics of both regions • C. Modeling a FTA between both regions • With traditional model • With new model focusing on the interrelation between trade and investment INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  4. 4. Trade and Investment in Latin America and Asia • A. Institutional point of view • Both regions: from import substitution strategies to trade (unilateral/regional/multilateral) liberalization • Gradual approach in Asia… rapid liberalization in Latin America • Different exchange rate strategies INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  5. 5. Trade and Investment in Latin America and Asia • Proliferation of RTAs worldwide • … and especially in Asia and LA • In Asia RTAs mostly driven by Japan and Singapore • … China and India are also key players • China and India have mostly signed with developing countries • Cross regional RTAs, with Singapore in particular • This gives birth to the “noodle” Bowl INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  6. 6. Trade and Investment in Latin America and Asia INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  7. 7. Trade and Investment in Latin America and Asia • 91 RTAs currently in effect involving at least LA countries • Majority are bilateral agreements. • From 2000, cross regional agreements with Chile as the key driver (EU, US, EFTA, Korea, China, Australia…). • This gives another “Spaghetti” (?) bowl INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  8. 8. Trade and Investment in Latin America and Asia INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  9. 9. Trade and Investment in Latin America and Asia • Trade and investment relations between the two regions • Relatively new phenomenon (Medalla and Balboa, 2009) • Today: fifteen bilateral/plurilateral RTAs between Asian and LA countries • …all of which have been signed in the last seven years • Cover trade… and investment (“Singapore issues”) • Important role of Korean on one side, Chile and Peru on the other side. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  10. 10. Trade and Investment in Latin America and Asia • Trade openness (Exports+Imports)/GDP 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Asia LAC INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  11. 11. Trade and Investment in Latin America and Asia • Share of exports to the region, Asia 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Industrial Agriculture Primary Total INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  12. 12. Trade and Investment in Latin America and Asia • Share of exports to the region, Latin America 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Industrial Agriculture Primary Total INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  13. 13. Trade and Investment in Latin America and Asia • Structure of exports, Asia 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Industrial Agriculture Primary INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  14. 14. Trade and Investment in Latin America and Asia • Structure of exports, Latin America 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Industrial Agriculture Primary INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  15. 15. Trade and Investment in Latin America and Asia • Aggregate Intra-Industry Trade Index 0.9 0.8 0.7 0.6 0.5 Asia 0.4 Latin America 0.3 0.2 0.1 0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  16. 16. Trade and Investment in Latin America and Asia • Top three Revealed Comparative Advantages by HS2 Chapter – 2007 • (Light grey: fish., agric. and transformed agric. products; dark grey: other sectors) As Bangladesh 53 61 62 As Cambodia 61 62 64 As China 66 67 46 As India 50 57 52 As Indonesia 80 15 92 As Korea 60 89 54 As Lao PDR 74 9 44 As Malaysia 15 80 85 As Pakistan 63 52 57 As Philippines 46 13 85 As Sri Lanka 14 9 53 As Thailand 16 80 40 As Vietnam 46 64 9 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  17. 17. Trade and Investment in Latin America and Asia • Top three Revealed Comparative Advantages by HS2 Chapter – 2007 • (Light grey: fish., agric. and transformed agric. products; dark grey: other sectors) SA Argentina 23 12 15 SA Bolivia 80 26 23 SA Brazil 12 17 9 SA Chile 74 26 47 SA Colombia 9 6 8 SA Costa Rica 8 6 9 SA Ecuador 8 6 16 SA El Salvador 61 9 17 SA Guatemala 9 17 61 SA Guyana 17 10 26 SA Honduras 9 61 8 SA Nicaragua 9 61 62 SA Panama 89 8 3 SA Paraguay 12 23 10 SA Peru 80 26 78 SA Uruguay 51 41 2 SA Venezuela 27 76 31 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  18. 18. Trade and Investment in Latin America and Asia • Rate of protection applied on imports, average 1995-1998 and 2005- 2008 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 1995-1998 2005-2008 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  19. 19. Trade and Investment in Latin America and Asia • Rate of protection applied on agric. imports, avrge 1995-1998 and 2005- 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 1995-1998 2005-2008 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  20. 20. Trade and Investment in Latin America and Asia • Rate of protection faced by exports, average 2005-2008 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  21. 21. Trade and Investment in Latin America and Asia • Main findings • Proliferation of RTAs, cross regional since 2004, cover trade and investment • Latin America: • exports more oriented within the region, • less IIT, • more agricultural and primary exports, • protection still high (exception: Chile) with low dispersion • Asia: • exports more oriented outside the region, • More IIT, • more industrial exports, • Protection still high (exception: SGP, HK) with high dispersion INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  22. 22. Trade and Investment in Latin America and Asia • Large economies (China, India, Brazil, Argentina…) • Complementary pattern of trade, • Protection significant • RTAs cover trade… and investment INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  23. 23. POTENTIAL IMPACTS OF AN ASIA-LAC FTA INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  24. 24. • Implementation between 2010 and 2015 • Potential Impacts in 2020 • May not be a realistic FTA: • all products included • From Pakistan to Brazil • With or without HIC Asian countries • No modeling of trade liberalization in services • MIRAGE CGE model • Dynamic, Multi sector • Main source of data: GTAP 7 • Additional source of data: MAcMapHS6v2 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  25. 25. Some innovations • Consistent Tariff Aggregator • Anderson (2009), Laborde (2008) and Laborde, Martin and Van Der Mensbrugghe (2009) • FDI • Dataset based on Boumellassa, Gouel and Laborde (2007) • Modeling approach based on Laborde and Lakatos (2009) INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  26. 26. Modeling FDI (1) Households Firms Simultaneous Total choice of Self financing Choice of the location and investment by Household destination capacity of investment sector of investment sector i location sector i in region r sector i in region r sector i in region s Cash flow of Household sector j in sector i in savings from region r sector i in region r region s country r sector j in region s ..... ..... INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  27. 27. Modeling FDI (2) • Links between FTA, BIT and FDI • Dilution effects? • Links between Trade, FDI and Trade costs • Other Expected effects: • End of the tariff jumping arguments INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  28. 28. Real income - % changes compared to the baseline by 2020 3.00 Basic model Large FTA 2.50 No FDI + Large FTA Large FTA 2.00 Large FTA+BIT 1.50 1.00 0.50 0.00 -0.50 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  29. 29. Real income, % changes compared to the baseline 0.02 0.01 0.00 -0.01 -0.02 -0.03 -0.04 -0.05 Basic model Large FTA No FDI + Large FTA Large FTA Large FTA+BIT -0.06 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  30. 30. With or Without Rich Asian countries, Real Income variations 2.00 Large FTA+BIT "Developing FTA+BIT" 1.50 1.00 0.50 0.00 -0.50 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  31. 31. Export variations, % changes compared to baseline 16.00 No FDI + Large FTA 14.00 12.00 Large FTA 10.00 Large FTA+BIT 8.00 6.00 4.00 2.00 0.00 -2.00 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  32. 32. -10.00 10.00 15.00 0.00 5.00 -5.00 Andean Communities Argentina ASEAN Brazil Central America Central Asia Chile China HK_Singarpore Large FTA India Japan Unskilled real wages Large FTA+BIT Korea Rest of Asia INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE No FDI + Large FTA Rest of Mercosur South Asia Venezuela Andean Communities Argentina ASEAN to baseline Brazil Central America Central Asia Chile China HK_Singarpore India Japan Korea Rest of Asia Unskilled real wages in agriculture Rest of Mercosur South Asia Venezuela Poverty reduction and Real wages, % changes compared
  33. 33. Inwards FDI (baseline =1) 1.25 1.2 1.15 1.1 1.05 1 0.95 Large FTA 0.9 Large FTA+BIT 0.85 "Developing" FTA 0.8 Developing FTA+BIT INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  34. 34. Outwards FDI (baseline =1) 1.2 1.15 1.1 1.05 1 Large FTA 0.95 Large FTA+BIT 0.9 "Developing" FTA 0.85 Developing FTA+BIT INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×