New research reveals strong negative impact of chinese exports on Latin America employment creation

As part of Latin American Steel Congress, Alacero-53 activities, Germano Mendes de Paula, PhD presented the research paper: “Metal-mechanic Chain in Latin America: economic relevance, opportunities and threats”, that was developed in 2012 ponsored by Alacero. Among key findings, research reveals the negative incidence of metal-mechanic imports from China on employment creation in the 4 countries considered in the study (Argentina, Brasil, Colombia and Mexico).

Based on the input-output matrix of each country, the paper quantifies that every 1 million dollar of metal-mechanic products imports, brings about the loss of 11 direct jobs. If indirect and induced effects are also considered, the loss totals between 46 and 64 jobs for every 1 million dollar of metal-mechanic products imported, depending on the considered country. The most important threat to the metal-mechanic chain is the commercial deficit with China, that grew from 8 billion dollars in 2003 to 48 billion dollars in 2010 and 64 billion dollars in 2011.

During his presentation, Dr. Mendes de Paula concluded: “The performance of the metal-mechanic value chain has contributed to Latin America deindustrialization”. He also pointed out that manufacturing industry (being metal-mechanic chain a part of it) has been decreasing its share among gross product of the region during the last years.

Additionally, the paper shows the great importance that metal-mechanic value chain has for the economies of the researched countries. Based on each country economic information and input-output matrixes, research can conclude that metal-mechanic value chain represents about 16% of industrial gross product, creates high-quality jobs, presents high forward linkeages and strong multiplying effects.

The metal-mechanic value chain is composed by 4 activities: automotive and transportation materials industries, infrastructure and construction sectors, primary, industrial and services activities investments that involve machinery and equipment acquisitions, and durable consumer goods production. It generates more than 4 million direct jobs and almost 20 million indirect jobs in the considered countries. Also, the metal-mechanic chain has elevated multiplying effects on diverse aspects of these economies.

An executive summary of “Metal-mechanic Chain in Latin America: economic relevance, opportunities and threats” is available at http://www.alacero.org/ .

Alacero, Santiago