STI’s regular contributor, Dr Germano Mendes de Paula, presented a research paper at the Alacero annual conference which reveals the negative impact of imports from China on employment creation in the four countries considered in the study (Argentina, Brazil, Colombia and Mexico).
The paper quantifies that for every US$1M of metal and metal containing products imports about 11 direct jobs are lost. If indirect and induced effects are also considered, the loss totals between 46 and 64 jobs for every $1M imported, the range depending on the country considered.
The most important threat to the import chain is the commercial deficit with China, that grew from $8bn in 2003 to $48bn in 2010 and $64bn in 2011. Dr Mendes de Paula concludes that such imports are contributing to Latin America’s deindustrialization. He also pointed out that manufacturing industry has been decreasing its share of contribution to GDP in recent years.
Additionally, the paper shows the great importance that metal-manufacturing value chain has for the economies of the countries considered. Based on each country’s economic information and input/output matrixes, the research concludes that the metal-mechanical value chain represents about 16% of industrial gross product, creates high-quality jobs, presents high forward linkages and strong multiplying effects.
The metal-mechanical value chain is composed of four activities: automotive and transportation industries, infrastructure and construction sectors, primary metal production and industry, and services activities that involve machinery and equipment acquisitions, and durable consumer goods production. It generates more than 4M direct jobs and almost 20M indirect jobs in the four countries.
Also, the metal-mechanical chain has increased multiplying effects on diverse aspects of these economies.
An executive summary of the paper ‘Metal-mechanic Chain in Latin America: economic relevance, opportunities and threats’ is available at www.alacero.org