From State to Market: A Fork in the Reform Road

This chapter undertakes a cross-regional comparison of the developmental paths of China and the Latin American countries of Argentina, Brazil, Chile, Mexico, and Peru (LAC 5). It traces the economic histories and policies implemented within the LAC-5 from the 1950s until the 1980s before turning to China to do the same from the 1980s onward. The author argues that the contrasting underlying logic between the Washington Consensus and the Beijing Consensus can explain the widely divergent outcomes in the development of Latin America and China.

Ratcheting Down the Industrial Ladder in Mexico

This chapter analyses Mexico’s deteriorating economic relationship with China, tracing its reform trajectory from the adoption of NAFTA in the 1990s, to China’s WTO entrance, and to the ways China’s rise is exacerbating tensions between Mexico and the US today. The author argues that Mexico failed to implement public policies and institutional reforms to bolster companies and position them to perform successfully under NAFTA. Instead, elite policymakers chose to rely on a neoliberal hands-off industrial development strategy, effectively kicking away the ladder of state guidance for industrial promotion, reducing such tools as public credit, tax breaks, trade tariffs, and so on. This led to Mexico’s incorporation into China’s internationalized development strategy as an importer of Chinese goods, which has left it with a massive trade deficit with China over the past twenty-five years.

An Institutional Resource Curse in Argentina and Brazil

This chapter details the incorporation of Argentina and Brazil into China’s internationalized development strategy as its demand for natural resources skyrocketed. In doing so, it considers the effects of institutional weakness and natural resource abundance on economic performance and the ways effective institutions deteriorate during a commodity boom. It proceeds in three sections: the first analyzing the rise of China in Argentina and Brazil post-2000, the second reviewing the developmentalist model both countries implemented during that time, and the third analyzing the resulting institutional erosion.

Dragonomics: An Internationalized Development Strategy

This chapter argues that China’s incorporation of Latin America into its internationalized development strategy stems from China’s need for resources from emerging economies to sustain its domestic development, but this has highlighted the stark differences in institutional strength between LAC countries. To bear this claim out, the author examines the history of China-LAC commercial relations, as well as the similarities and differences between China’s developmental path and that of other East Asian Developmental States. Based upon three developmental themes, the author delineates six of China’s strategic partners in the region into three case studies: first, the free trade agreements pursued by Chile, Costa Rica, and Peru; second, the institutional resource curse suffered by Argentina and Brazil; and finally, the FDI export–led industrialization strategy adopted by Mexico. The countries in the first two case studies have built tighter economic ties with China, opening up more space for policymaking and innovation, while Mexico in the final case study has had less export-led trade with China and comparatively weaker economic growth.