pp 1–22 | Cite as

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

  • Xiang ZhangEmail author


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.


Outward foreign direct investment (OFDI) Chinese OFDI Geography of OFDI China Latin America Cross-strait competition 



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.


  1. Aleksynska, M., & Havrylchyk, O. (2013). FDI from the south: The role of institutional distance and natural resources. European Journal of Political Economy, 29, 38–53.CrossRefGoogle Scholar
  2. Anderson, J., & Sutherland, D. (2015). Developed economy investment promotion agencies and emerging market foreign direct investment: The case of Chinese FDI in Canada. Journal of World Business, 50(4), 815–825.CrossRefGoogle Scholar
  3. Bathelt, H., & Li, P. F. (2013). Global cluster networks—Foreign direct investment flows from Canada to China. Journal of Economic Geography, 14(1), 45–71.CrossRefGoogle Scholar
  4. Beeson, M. (2014). Regionalism and globalization in East Asia: Politics, security and economic development. Basingstoke: Palgrave Macmillan.CrossRefGoogle Scholar
  5. Bhavan, T., Xu, C., & Zhong, C. (2010). Determinants and growth effect of FDI in South Asian economies: Evidence from a panel data analysis. International Business Research, 4(1), 43.Google Scholar
  6. Blanc-Brude, F., Cookson, G., Piesse, J., & Strange, R. (2014). The FDI location decision: Distance and the effects of spatial dependence. International Business Review, 23(4), 797–810.CrossRefGoogle Scholar
  7. Blonigen, B. A., Davies, R. B., Waddell, G. R., & Naughton, H. T. (2007). FDI in space: Spatial autoregressive relationships in foreign direct investment. European Economic Review, 51(5), 1303–1325.CrossRefGoogle Scholar
  8. Blonigen, B. A., & Piger, J. (2014). Determinants of foreign direct investment. Canadian Journal of Economics/Revue canadienne d’économique, 47(3), 775–812.CrossRefGoogle Scholar
  9. Breslin, S. (2016). China and the global political economy. London: Palgrave Macmillan.Google Scholar
  10. Chen, W., Dollar, D., & Tang, H. (2016). Why is China investing in Africa? Evidence from the Firm Level, The World Bank Economic Review,. Scholar
  11. Chen, T., & Pérez Ludeña, M. (2014). Chinese foreign direct investment in Latin America and the Caribbean. CEPAL. Accessed 31 May 2018.
  12. Chow, G. C. (2015). China’s economic transformation. New York: Wiley.Google Scholar
  13. de Economia, Secretaria. (2016). Informe estadistico sobre el comportamiento de la inversion extranjera directa en Mexico. Mexico City: CNIE/SE.Google Scholar
  14. Decreuse, B., & Maarek, P. (2015). FDI and the labor share in developing countries: A theory and some evidence. Annals of Economics and Statistics/Annales d’Économie et de Statistique, (119/120), 289–319.Google Scholar
  15. Dialga, I., & Vallée, T. (2015). The index of economic freedom: Methodological matters. LEMNA Working Paper EA 4272. Accessed 31 May 2018.
  16. Dinga, M., & Münich, D. (2010). The impact of territorially concentrated FDI on local labor markets: Evidence from the Czech Republic. Labour Economics, 17(2), 354–367.CrossRefGoogle Scholar
  17. Drabek, Z., & Payne, W. (2002). The impact of transparency on foreign direct investment. Journal of Economic Integration, 17(4), 777–810.CrossRefGoogle Scholar
  18. Du, J., & Zhang, Y. (2017). Does one belt one road initiative promote Chinese overseas direct investment? China Economic Review. Scholar
  19. Dunning, J. H. (1998). Globalization and the new geography of foreign direct investment. Oxford Development Studies, 26(1), 47–69.CrossRefGoogle Scholar
  20. Egger, P., & Pfaffermayr, M. (2004). Distance, trade and FDI: A Hausman-Taylor SUR approach. Journal of Applied Econometrics, 19(2), 227–246.CrossRefGoogle Scholar
  21. Folk, B. C., & Jomo, K. S. (2013). Ethnic business: Chinese capitalism in Southeast Asia. London: Routledge.Google Scholar
  22. Fontagné, L. (1999). Foreign direct investment and international trade: Complements or substitutes? In OECD science, technology and industry working papers, 1999/03. Paris: OECD Publishing.
  23. Foster, G. K. (2011). Foreign investment and indigenous peoples: Options for promoting equilibrium between economic development and indigenous rights. Michigan Journal of International Law, 33, 627–692.Google Scholar
  24. Freitas, G. (2016). Chinesa assume controle de exportadora de soja do Brasil. Bloomberg. Retrieved on May 15, 2017.
  25. Frost, S. (2004). Chinese outward direct investment in Southeast Asia: How big are the flows and what does it mean for the region? The Pacific Review, 17(3), 323–340.CrossRefGoogle Scholar
  26. General Administration of Customs. (2017). Zhongguo Haiguan Tongji Nianjian 2016. Beijing: China Customs Press.Google Scholar
  27. Gledhill, J. (2015). The new war on the poor: The production of insecurity in Latin America. London: Zed Books Ltd.Google Scholar
  28. Gonzalez-Vicente, R. (2011). The internationalization of the Chinese state. Political Geography, 30(7), 402–411.CrossRefGoogle Scholar
  29. Gonzalez-Vicente, R. (2012). Mapping Chinese mining investment in Latin America: Politics or market? The China Quarterly, 209, 35–58.CrossRefGoogle Scholar
  30. Gonzalez-Vicente, R. (2013). Development dynamics of Chinese resource-based investment in Peru and Ecuador. Latin American Politics and Society, 55(1), 46–72.CrossRefGoogle Scholar
  31. Graham, E. M. (1995). Foreign direct investment in the world economy (No. 95/59). Washington, DC: International Monetary Fund.Google Scholar
  32. Gregory, J. (2010). Counterparty credit risk: The new challenge for global financial markets (Vol. 470). New York: John Wiley & Sons.Google Scholar
  33. Harvey, D. (2001). Spaces of capital: Towards a critical geography. New York: Routledge.Google Scholar
  34. Hiratuka, C., & Sarti, F. (2016). Relações Econômicas entre Brasil e China: Análise dos Fluxos de Comércio e Investimento Direto Estrangeiro. Revista Tempo do Mundo, 2(1), 83–98.Google Scholar
  35. Huang, H., & Wei, Y. D. (2011). Spatial-temporal patterns and determinants of foreign direct investment in China. Erdkunde, 65(1), 7–23.CrossRefGoogle Scholar
  36. Huang, H., & Wei, Y. D. (2014). Intra-metropolitan location of foreign direct investment in Wuhan, China: Institution, urban structure, and accessibility. Applied Geography, 47, 78–88.CrossRefGoogle Scholar
  37. Huang, H., & Wei, Y. D. (2016). Spatial inequality of foreign direct investment in China: Institutional change, agglomeration economies, and market access. Applied Geography, 69, 99–111.CrossRefGoogle Scholar
  38. Instituto Nacional de Estadística y Censo (INEC). (2016). Inversión Directa Extranjera: Años 2013–2015. Panama: INEC.Google Scholar
  39. International Monetary Fund (IMF). (2004). Definition on Foreign Direct Investment (FDI) Terms. Issues Paper (DITEG) No. 20.
  40. Jenkins, R., Peters, E. D., & Moreira, M. M. (2008). The impact of China on Latin America and the Caribbean. World Development, 36(2), 235–253.CrossRefGoogle Scholar
  41. Kang, Y., & Jiang, F. (2012). FDI location choice of Chinese multinationals in East and Southeast Asia: Traditional economic factors and institutional perspective. Journal of world Business, 47(1), 45–53.CrossRefGoogle Scholar
  42. Li, H. (2005). Rivalry between Taiwan and the PRC in Latin America. Journal of Chinese Political Science, 10(2), 77–102.CrossRefGoogle Scholar
  43. Liu, X., Burridge, P., & Sinclair, P. J. (2002). Relationships between economic growth, foreign direct investment and trade: evidence from China. Applied Economics, 34(11), 1433–1440.CrossRefGoogle Scholar
  44. Liu, X., Wang, C., & Wei, Y. (2001). Causal links between foreign direct investment and trade in China. China Economic Review, 12(2), 190–202.CrossRefGoogle Scholar
  45. Lucke, N., & Eichler, S. (2016). Foreign direct investment: The role of institutional and cultural determinants. Applied Economics, 48(11), 935–956.CrossRefGoogle Scholar
  46. Luo, Y. (2008). The changing Chinese culture and business behavior: The perspective of intertwinement between guanxi and corruption. International Business Review, 17(2), 188–193.CrossRefGoogle Scholar
  47. Mathur, A., & Singh, K. (2013). Foreign direct investment, corruption and democracy. Applied Economics, 45(8), 991–1002.CrossRefGoogle Scholar
  48. Mayer, T., Melitz, M. J., & Ottaviano, G. I. (2014). Market size, competition, and the product mix of exporters. The American Economic Review, 104(2), 495–536.CrossRefGoogle Scholar
  49. McKay, B. M., Alonso-Fradejas, A., Brent, Z. W., Sauer, S., & Xu, Y. (2016). China and Latin America: Towards a new consensus of resource control? Third World Thematics: A TWQ Journal, 1(5), 592–611.CrossRefGoogle Scholar
  50. McKinnon, R. I. (2010). Money and capital in economic development. Washington, DC: Brookings Institution Press.Google Scholar
  51. Miller, T., Kim, A. B., & Holmes, K. (2013). 2013 index of economic freedom. Washington DC: The Heritage Foundation.Google Scholar
  52. Ministry of Commerce (MOFCOM). (2016). 2015 statistical bulletin of China’s outward foreign direct investment. Beijing: China Statistical Press.Google Scholar
  53. Ministry of Commerce (MOFCOM). (2017a). Guobie Zhinan—Boliweiya. Beijing: China Statistical Press.Google Scholar
  54. Ministry of Commerce (MOFCOM). (2017b). Guobie Zhinan—Eguaduoer. Beijing: China Statistical Press.Google Scholar
  55. Ministry of Commerce (MOFCOM). (2017c). Guobie Zhinan—Agenting. Beijing: China Statistical Press.Google Scholar
  56. Naughton, B. (2011). China’s economic policy today: The new state activism. Eurasian Geography and Economics, 52(3), 313–329.CrossRefGoogle Scholar
  57. Nielsen, B. B., Asmussen, C. G., & Weatherall, C. D. (2017). The location choice of foreign direct investments: Empirical evidence and methodological challenges. Journal of World Business, 52(1), 62–82.CrossRefGoogle Scholar
  58. O’Driscoll, G. P., Feulner, E. J., & O’Grady, M. A. (2001). The index of economic freedom. Washington, DC: Heritage Foundation.Google Scholar
  59. OECD. (2008). OECD international direct investment statistics 2008. Paris: OECD Publishing.Google Scholar
  60. Pandya, S. S. (2016). Political economy of foreign direct investment: Globalized production in the twenty-first century. Annual Review of Political Science, 19, 455–475.CrossRefGoogle Scholar
  61. Peters, E. D. (2000). La inversión extranjera en México. Santiago: CEPAL.Google Scholar
  62. Peters, E. D. (2014). Mexico and the Asian Challenge, 2000–2012. In C. J. Arnson, J. Heine, & C. Zaino (Eds.), Reaching across the Pacific: Latin America and Asia in the New Century (pp. 9–30). Washington DC: Wilson Center.Google Scholar
  63. Peters, E. D. (2016). Chinese investment in Mexico: The contemporary context and challenges. Asian Perspective, 40, 627–652.Google Scholar
  64. Reuters. (2013). UPDATE 1-Mexico hourly wages now lower than China’s-study. Retrieved December 27, 2017.
  65. Rodríguez, M. (2008). La batalla diplomática de Beijing y Taipei en América Latina y el Caribe. Revista CIDOB D’Afers Internacionals, 81, 209–231.Google Scholar
  66. Sargent, J., & Matthews, L. (2009). China versus Mexico in the global EPZ industry: Maquiladoras, FDI quality, and plant mortality. World Development, 37(6), 1069–1082.CrossRefGoogle Scholar
  67. State Council. (2001). The 10th five-year plan for economic and social development of the People’s Republic of China (the 10th five-year plan). Accessed 31 May 2018. (in Chinese only).
  68. Twomey, M. J. (2001). A century of foreign investment in Mexico. UM-Deardon Economics Working Paper, No. 98. Google Scholar
  69. UNCTAD. (2016). United Nations Conference on Trade and development STAT Database.
  70. Utar, H., & Ruiz, L. B. T. (2013). International competition and industrial evolution: Evidence from the impact of Chinese competition on Mexican maquiladoras. Journal of Development Economics, 105, 267–287.CrossRefGoogle Scholar
  71. Vadi, V. S. (2010). When cultures collide: Foreign direct investment, natural resources, and indigenous heritage in international investment law. Columbia Human Rights Law Review, 42, 797–890.Google Scholar
  72. Velásquez, S. O. (2017). Inversión Extranjera Directa de China en América Latina y el Caribe, aspectos metodológicos y tendencias durante 2001–2016. Economía Informa, 406, 4–17.CrossRefGoogle Scholar
  73. Wang, Y., Ning, L., Li, J., & Prevezer, M. (2016). Foreign direct investment spillovers and the geography of innovation in Chinese regions: The role of regional industrial specialization and diversity. Regional Studies, 50(5), 805–822.CrossRefGoogle Scholar
  74. Warf, B. (2016). Global geographies of corruption. GeoJournal, 81(5), 657–669.CrossRefGoogle Scholar
  75. Warf, B., & Stewart, S. (2016). Latin American corruption in geographic perspective. Journal of Latin American Geography, 15(1), 133–155.CrossRefGoogle Scholar
  76. Wei, Y. D., & Liefner, I. (2012). Globalization, industrial restructuring, and regional development in China. Applied Geography, 32(1), 102–105.CrossRefGoogle Scholar
  77. Wei, Y. D., Luo, J., & Zhou, Q. (2010). Location decisions and network configurations of foreign investment in urban China. The Professional Geographer, 62(2), 264–283.CrossRefGoogle Scholar
  78. Winder, G. M. (2006). Webs of enterprise 1850–1914: Applying a broad definition of FDI. Annals of the Association of American Geographers, 96(4), 788–806.CrossRefGoogle Scholar
  79. Xin, K. K., & Pearce, J. L. (1996). Guanxi: Connections as substitutes for formal institutional support. Academy of Management Journal, 39(6), 1641–1658.Google Scholar
  80. Yao, S. (2006). On economic growth, FDI and exports in China. Applied Economics, 38(3), 339–351.CrossRefGoogle Scholar
  81. Yeung, H. W. C. (1998). The political economy of transnational corporations: A study of the regionalization of Singaporean firms. Political Geography, 17(4), 389–416.CrossRefGoogle Scholar
  82. Yeung, H. W. C. (2005). The firm as social networks: An organisational perspective. Growth and Change, 36(3), 307–328.CrossRefGoogle Scholar
  83. Zhang, K. H. (2006). Is China world factory? In K. H. Zhang (Ed.), China as the world factory (pp. 257–273). New York: Routledge.Google Scholar

Copyright information

© Springer Nature B.V. 2018

Authors and Affiliations

  1. 1.Department of GeographyUniversity of KansasLawrenceUSA

Personalised recommendations