Trade Interactions of China-Latin America vis-à-vis ASEAN-Latin America: The Relevance of the Center-Periphery Relations?

Abstract

This paper compares the role of relative factor endowment differences in driving bilateral trade flows between China and six selected ASEAN economies with Latin America. The findings reveal that relative factor endowment differences are consistently positive and significant for increasing export flows between China and Latin America, suggesting that complementary comparative advantages are developing along the lines of center-periphery relations. Contrary to China-Latin America, specific individual ASEAN countries trade in manufactures with Latin America offer prospects for trade specialization beyond the traditional view of comparative advantages, which is based on similarities in factor endowments. Taken together, these findings suggest that the ASEAN region can plausibly be a game changer to the existing patterns of interregional Asia-Latin America relationship, namely that of China-Latin America, by capitalizing on intra-industry trade flows with their Latin American counterparts.