The Trade Effect Of China’s OFDI To Latin America

Within the continuously promotion of global economic integration,China’s economic OFDI(outward foreign direct investment)presents on the rapid development tendency accompanying with the overall economic blooming.Recent years,China has attached great importance to Latin American and become the second largest trading partner while Latin American distract grows up to the important area in terms of China’s OFDI.There exists theoretic and realistic significance to discuss relationship between China’s OFDI in Latin American and bilateral trade,to research potential problems between China’s OFDI in Latin American and import-export trade.This paper focuses on the trade effects of China’s OFDI in Latin American,overviews fundamental background and development history of China’s OFDI in Latin American and bilateral trade.Besides,we focus on the relationship of substitution,complementarity and both substitution and complementarity between trade and investment,sort out basic theories related to the effects of OFDI and bilateral trade to provide theoretical support.Concentrating on the essential situation between OFDI and two-way trade,we analyze the features of that from the gross scale,national structure and industry organization.Adopting method of empirical analysis,focusing on trade effect of OFDI,building export trade and import trade effect gravity model,we examine the regression result obtained from model.The results show that China’s OFDI in Latin American has both export promotion effect and reverse import effect.Finally,we propose political proposal from the government and enterprise aspects in order to deepen China’s OFDI in Latin American and bilateral economic and trade relations.