Factoid: US and China in Latin America

An AP article entitled "Stronger US economy and dollar tighten Latin American ties" has some interesting factoids about the Latin American trade with China and the US. 

According to the article, which cites a Brooking analysis of UN trade data, from 2000 to 2013, the percentage of Latin American exports bound for China increased from less than 1% to 10%. During the same period, the percentage of Latin American exports shipped to the US decreased from 58% to 40%. This is the sort of factoid that fits with the typical rising China/declining US influence narrative.

But wait a minute. China still only absorbs 10% of the region exports while the US absorbs four times as much. Also, if the US share of Latin American exports dropped by 18percentage points while the Chinese share only increased by 10 points, where did the other 8 points go? The article mentions briefly that Latin American trade with the rest of the world also increased, so that's probably where the 8 points went.

So what I see here is not so much a story about the rise of China's influence in the region, as much as one of the region diversifying its exports away from the US. This is the sort of thing that one would expect due to globalization and the US'  Great Recession. Also, it is probably a good thing for the region to be less dependent one economy to absorb the majority of its exports as it insulates it from external shocks due to US economic downturns. Indeed, that is supposed to be one of the advantages of globalization.

Another tidbit in the article is the content of Latin American exports to China versus that of exports to the US. According to the article,  60% of the region's exports to China consisted of commodities while only 5% constituting high tech products. In contrast, 70% of exports to the US were manufactured goods and 20% were high tech goods.While I don't attribute much credence to the structuralist/dependency argument that the region's development is hampered by exporting commodities in exchange for manufactured goods, it is interesting to note that China fits the role of villain in that theory much better than the US.

I find it even more interesting (one might say ironic) that the leftish (my term) governments of Latin America, who often do attribute credence to structuralism/dependency theory, are the ones who have been so enthusiastic about developing ties with China. Of course, that enthusiasm seems reasonable on political grounds, but it appears to be entirely inconsistent with their economic view of the world. Indeed, it seems as if they have been embracing a sort of Sino-dependency at the same time that trade with the US  exhibits the balanced characteristics that the dependency folks argued that the US dominated world system denied the region.

Factoid: US Manufacturing in 2014

Back in January, Mark Perry providesdanother empirical nugget, this time about US manufacturing

10 Largest US Manufacturing Industries, 2014	Revenue (Millions)	Examples
1	Petroleum & Coal Products	$1,617,688	Exxon, Chevron, Conoco
2	Computers & Other Electronic Products	$788,267	HP, IBM, Apple
3	Chemicals	$455,087	P&G, Dow, DuPont
4	Food	$377,850	General Mills, Kellogg, Hershey
5	Motor Vehicles	$350,695	Ford, GM, Harley
6	Pharmaceuticals	$311,292	J&J, Pfizer, Merck
7	Machinery	$284,866	Caterpillar, Deere, Xerox
8	Aerospace & Defense	$275,893	Boeing, Lockheed Martin
9	Electrical Equipment & Appliances	$239,477	GE, Emerson, Whirlpool
10	Motor Vehicle Parts	$141,430	Johnson Controls, Cummins, Lear
	Total	$4,842,545

Perry notes that the combined revenue of these ten industries ($4.8 trillion) is equivalent to the entire GDP of Japan, the world 3rd largest economy. So, this is another "the rumors of manufacturing's demise have been greatly exaggerated" factoid.

However, such factoids always come with a qualifier about employment cuts  in manufacturing. As the FRED data on employment in US manufacturing below shows, manufacturers just don't employ as many people any more.

The big slide was from 17.32 million in July 2001 to 11.46 million in January 2010 (albeit with a three year pause at around 14.2 million from 2003-2006). By December 2014, employment had grown to 12.23 million. July 1979, 19.53 million.

This slide is even more significant if one thinks in terms of the size of the US population. In 1980, the US population was about 226 million, so the 19 million manufacturing employees made up 8.4% of the population. In 2010, the US population was about 308 million and the 12 million manufacturing employees accounted for only 3.8% of the population.