Gallagher OpEd in FT: China Committed to Latin American Economies
Kevin Gallagher, Professor of Global Development Policy at the Frederick S. Pardee School of Global Studies at Boston University, said while Western-backed banks are retreating from investing in Latin America, China’s development banks are doubling down on ailing Latin American economies.
Gallagher made his case in a February 12, 2016 op-ed in the Financial Times, entitled “China Doubles Bets on Ailing Latin American Economies.”
From the text of the article:
A three-fold increase from 2014, China’s 2015 finance to Latin America was more than the World Bank, Inter-American Development Bank, and the Development Bank of Latin America combined.
The majority of the loans went to Venezuela, Ecuador and Brazil, countries facing the harshest downturns in the region. Barbados, Costa Rica, and Bolivia also join the list— with the majority of all Chinese finance in Latin America going into infrastructure and manufacturing.
Gallagher goes on to argue the Chinese investments came at a crucial time for Latin American economies, many of which have seen a recent downturn while other sources of revenue have disappeared.
Chinese development bank finance couldn’t come at a better time for Latin America— as the region is experiencing a significant downturn and other sources of finance are drying up. Thanks to Chinese demand and a boost in commodities prices, Latin American economies experienced a China boom from 2003 to 2013, a decade of economic growth unrivaled since the 1970s.
However, Latin American economies contracted in 2015 and are projected to grow 0.1 per cent in 2016, according to the World Bank. And now the private sector is retreating from the region at an alarming rate, with net capital flows to Latin America negative for the first time since 1998.
You can read the entire op-ed here.
Gallagher has edited or co-edited a number of books, including Rethinking Foreign Investment for Sustainable Development: Lessons from Latin America (with Daniel Chudnovsky) and Putting Development First: the Importance of Policy Space in the WTO and IFIs. Learn more about him here.