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The socioeconomic geography of Chinese outward foreign direct investment in Latin America

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Abstract

This article examines the spatial pattern of Chinese outward foreign direct investment (OFDI) to Latin America and socioeconomic determinants that affect the attractiveness of Latin America for Chinese capital. I also treat Latin America as a political stage between Mainland China and Taiwan in the diplomatic competition. This research examines recent shifts of Chinese OFDI strategies into the Global South and China’s rising political power in the global capital network. This article consists a brief review of the role of foreign investment for both sending and receiving countries, a cartographic analysis of Chinese OFDI in Latin America, a statistical modeling of socioeconomic determinants of Chinese OFDI in receiving countries, and a set of country-specific vignettes of new features in Chinese OFDI. This research unveils several new trends associated with Chinese OFDI to Latin America: first, Chinese OFDI tends to transform from a resource-focused to a market-focused player; second, Chinese OFDI establishes a more diverse sectoral structure; third, Chinese investors tend to avoid investing into Taiwan’s diplomatic allies. Policy implications and concluding thoughts are placed as the finale for this research.

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Fig. 1

Source: Author’s own calculation based on data from the MOFCOM of People’s Republic of China)

Fig. 2

Source: MOFCOM of China 2016)

Fig. 3

Source: MOFCOM of China 2016)

Fig. 4

Source: Ministry of Foreign Affairs of Republic of China (Taiwan); asterisk indicates countries abandoned Taiwan relations after 2016; all other countries currently hold diplomatic relations with Mainland China)

Fig. 5

Source: Author’s own calculation based on MOFCOM (2016) data)

Fig. 6

Source: Author’s own calculation based on MOFCOM (2016) data)

Fig. 7

Source: Author’s own calculation based on MOFCOM (2016) data with the assistance of the ArcGIS cartogram tool by Carol APL (2015))

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Notes

  1. This research uses the board definition of Latin America which consists Mexico, Central America, the Caribbean, and South America.

  2. As this research was being carried out, on June 12, 2017, the Ministry of Foreign Affairs of Panama announced a rupture of its diplomatic relation with Taiwan. On the same day, it announced the establishment of a diplomatic relation with People’s Republic of China.

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Acknowledgements

The author would like to thank three anonymous reviewers for their helpful and constructive comments that greatly contributed to improving the final version of the paper. I would also like to thank the Editor for his generous comments and support during the review process. All remaining errors are my own.

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  1. Department of Geography, University of Kansas, Lawrence, KS, USA

    Xiang Zhang

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Zhang, X. The socioeconomic geography of Chinese outward foreign direct investment in Latin America. GeoJournal 84, 961–982 (2019). https://doi.org/10.1007/s10708-018-9902-3

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