Francisco A. Laguna & Jennie Linder Cunningham
Last week, we discussed China’s economic activities in Africa and saw a definite pattern of investments and projects aimed at securing natural resources and potential new markets. We also found that Chinese companies are willing (and able) to conduct business in countries that are characterized by political and economic corruption and instability, giving China a unique advantage in international business. This week, we explore China’s activities in Latin America to analyze whether the investment pattern is similar in the region.
Photo Credit: Yug via Wikimedia commons
Resource security also plays a major role in Chinese investments in Latin America. However, the political dynamic may differ in that Latin American nations tend, to a greater degree, to prioritize control over their own resources rather than remaining appealing / open to foreign investment. Today’s Latin American states tend to be stronger both politically and economically than their African counterparts.
Nevertheless, certain parts of Latin America can present challenges for any foreign investor, including drug violence, internal/terrorist political risk, expropriation and regulatory / legal bureaucracies. The return of “resource nationalism” throughout the region, especially in OPEC states like Venezuela and Ecuador, also poses significant risk to foreign companies.
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