The Panda’s Pawprint: The environmental impact of the China-led re-primarization in Latin America and the Caribbean
By Rebecca Ray
(October 2016)
Abstract
China’s meteoric rise as an economic partner for LAC economies is well documented: it is now the largest export market for South American goods and the second-largest market for LAC overall. But China’s demand for LAC exports and Chinese investments in LAC are concentrated in primary commodities, driving LAC away from industrial production and spurring “re-primarization.” This creates a conundrum for environmental economists, as the traditional “pollution haven” literature cannot adequately describe a situation of south-south investment relationships. In contrast “environmental Kuznets curve” literature anticipates that for middle-income countries such as those in Latin America, primary production is environmentally less sensitive than manufacturing; these hypotheses suggest that re-primarization would be environmentally beneficial for LAC. This paper tests these hypotheses against the evidence from the last ten years of LAC exports. It finds that primary production is more environmentally intensive than manufacturing in LAC, measured through net greenhouse gas emissions and water footprints.