The impact of Asia’s rise on the European Union and the United States dominates world headlines. The focus is also often on the pros and cons of China’s growing presence in Africa. Lost in the reports is mention of Latin America’s booming economies – and the role played by ascending Asia in helping to transform the region.
Latin America is rapidly emerging as a global economic power. And deepening economic links between Asia’s booming economies and Latin America have been pivotal in driving forward this evolution.
This is clearly good news for both regions – and for the global economy. Increasing trade connections between Asia and Latin America have helped shelter both regions from the worst effects of the economic crisis affecting the US and the EU.
The EU and the US have long urged developing countries to step up “south-south” trade to boost global trade flows, help create new jobs, raise revenues and diversify export patterns.
Until recently, however, globalisation was all about growing links between industrialised and emerging nations. Today, however, it’s the integration of emerging markets that has become a major engine of world growth.
China is of course spearheading the drive. “Latin America is looking towards China and Asia – and China and Asia are looking right back,” underlined the Organisation for Economic Cooperation and Development (OECD) in a report published in 2008.
But other Asian countries including Japan, South Korea and India, are also expanding their presence in Latin America. The Inter-American Development Bank says Asian trade with the region topped 256 billion US dollars in 2010 –more than Latin America’s annual trade with the EU and more than half of its trade with the US. China has displaced the US as Brazil’s top trading partner.
The World Trade Organisation (WTO) estimates intra-emerging market trade rose on average by 18 per cent per year from 2000 to 2008, faster than commerce between emerging and industrialised nations. It totalled 2.8 trillion US dollars in 2008, about half of emerging-market trade with all countries.
The rise in south-south trade is impressive. Chinese exports to other emerging markets, accounted for 9.5 per cent of GDP in 2008, compared with 2 per cent in 1985. India’s exports rose to 7.3 per cent from 1.5 per cent and Brazil’s almost doubled to 6.3 per cent.
It’s no secret; Asians are interested in Latin America’s natural resources. Commodity exports from Latin America to are thriving and likely to become even more buoyant as new highways being built across Latin America from the Atlantic to the Pacific oceans open up new trade routes to Asia.
Latin America is also an attractive market for Asia’s green technology firms. Indian pharmaceutical companies have started factories and joint ventures in Lain America and that produce millions of dollars worth of lost-cost generic drugs. Capital goods represent an estimated 54 per cent of Brazilian imports from China.
There is undoubtedly trade rivalry between the two regions as low-cost Asian manufactured goods compete with Latin America’s industrial products both in the region itself and on the global stage.
Asia and Latin American have so far dealt with such friction in a non-confrontational manner. Both sides have a vital interest in pushing for more dynamic south-south trade and investment flows. So does the rest of the world.