How Does China’s Growth How Does China’s Growth Affect Poverty Reduction in Affect Poverty Reduction in

Asia and Latin America?Asia and Latin America?

Rhys Jenkins and Chris EdwardsRhys Jenkins and Chris Edwards

University of East AngliaUniversity of East Anglia

People on<$2 a day in AsiaPeople on<$2 a day in Asia

NumberNumber % Population% Population

BangladeshBangladesh 111111 8383

CambodiaCambodia n.a.n.a. n.a.n.a.

IndiaIndia 825825 8080

IndonesiaIndonesia 115115 5555

PakistanPakistan 9494 6666

VietnamVietnam 5151 6464

6 Countries6 Countries 11961196 7575

People on <$2 a day in Latin People on <$2 a day in Latin AmericaAmerica

NumberNumber % Population% Population

BoliviaBolivia 33 3434

BrazilBrazil 4141 2424

HondurasHonduras 33 4444

MexicoMexico 2424 2424

NicaraguaNicaragua 55 9595

PeruPeru 1111 4141

6 Countries6 Countries 8787 2727

Impacts of China on Developing Impacts of China on Developing CountriesCountries

Increased market for exports to ChinaIncreased market for exports to China Increased competition from China in third marketsIncreased competition from China in third markets Increased competition from China in domestic Increased competition from China in domestic

marketmarket Effects on FDIEffects on FDI Multiplier effect of China’s growth on world outputMultiplier effect of China’s growth on world output Effect of Chinese demand on world pricesEffect of Chinese demand on world prices

Framework of AnalysisFramework of Analysis

Growth of China

Exports to ChinaCompetition in 3rd Markets

Competition in Domestic Market

FDI Flows

Agricultural Products

ExtractiveProducts

ManufacturesLabour-

intensive manufactures

Labour-Intensive

Agri. products

CompetingWith domestic

producers

CompetingWith other

imports

Diversionto China

Inflows fromChina

Increased prod.Increase prices

Increased unskilled labour

Negative where landIs taken over

Increased prod.Increased pricesIncreased taxes

Increased skilled labour

Increased gov. exp.Negative on env.

& livelihoods

Increased production

Increased skilled labour

Falling productionFalling prices

Reduced unskilled labour

Falling productionLarge fall in prices

Reduced unskilled labour

Positive if domestic food prices fall

Falling productionFalling prices

Increased taxes

Reduced labourCheaper

consumer goods

Falling prices

Cheaper consumer

goods

Falling productionReduced taxes

Reduced unskilled labourReduced gov.expenditure

Increased prod.Falling prices

Increased unskilled labour

Typology of ExportsTypology of Exports

Labour-intensive agricultural products (LA)Labour-intensive agricultural products (LA) Non-labour-intensive agricultural products Non-labour-intensive agricultural products

(OA)(OA) Forestry (F)Forestry (F) Minerals and petroleum (MP)Minerals and petroleum (MP) Labour-intensive manufactures (LM)Labour-intensive manufactures (LM) Other manufactures (OM)Other manufactures (OM)

Structure of Exports to China, 2001 Structure of Exports to China, 2001 (%)(%)

IndonesiaIndonesia VietnamVietnam BrazilBrazil PeruPeru

LALA 3.63.6 11.611.6 1.61.6 0.00.0

OAOA 6.16.1 4.44.4 32.132.1 59.059.0

FF 12.512.5 0.50.5 9.09.0 0.20.2

MPMP 21.721.7 75.175.1 28.928.9 40.040.0

LMLM 15.215.2 2.62.6 4.04.0 0.40.4

OMOM 40.940.9 5.95.9 24.524.5 0.40.4

Share of labour-intensive products Share of labour-intensive products threatened by Chinese competition threatened by Chinese competition

in total exports, 2001 (%)in total exports, 2001 (%)Agricultural Agricultural ProductsProducts

Manuf-Manuf-acturesactures TotalTotal

BangladeshBangladesh 0.30.3 89.589.5 89.889.8

CambodiaCambodia 1.81.8 93.693.6 95.495.4

IndonesiaIndonesia 2.72.7 27.627.6 30.230.2

PakistanPakistan 6.26.2 79.979.9 86.186.1

VietnamVietnam 8.68.6 36.636.6 45.245.2

MexicoMexico 2.22.2 12.412.4 14.614.6

Shares of Imports from China, 2001 Shares of Imports from China, 2001 (%)(%)

Labour-intensive Labour-intensive ManufacturesManufactures

Basic Consumer Basic Consumer

GoodsGoods

BangladeshBangladesh 48.548.5 2.72.7

CambodiaCambodia 62.862.8 9.19.1

VietnamVietnam 9.39.3 5.15.1

BoliviaBolivia 52.752.7 18.518.5

NicaraguaNicaragua 40.240.2 23.123.1

Aspects of China’s Growth Most Aspects of China’s Growth Most Likely to Impact on the PoorLikely to Impact on the Poor

Exports to Exports to ChinaChina

Exports to Exports to 33rdrd Markets Markets

Imports Imports from Chinafrom China

AsiaAsia IndonesiaIndonesia

VietnamVietnam

BangladeshBangladesh

CambodiaCambodia

PakistanPakistan

Latin Latin AmericaAmerica

BrazilBrazil

PeruPeru

MexicoMexico BoliviaBolivia

NicaraguaNicaragua

Implications for policyImplications for policy

How to respond to opportunities and How to respond to opportunities and challenges?challenges?

What are the implications for pro-poor What are the implications for pro-poor policies?policies?

Further Research on the Impact of Further Research on the Impact of China on International PovertyChina on International Poverty

Analysis of competition in labour-intensive Analysis of competition in labour-intensive products in 3products in 3rdrd country markets country markets

Identification of products likely to have pro-Identification of products likely to have pro-poor impactspoor impacts

Studies of individual value chainsStudies of individual value chains In depth country case studiesIn depth country case studies