BRI and railways in Latin America: how important are domestic politics?

Abstract

PurposeChina's experience of investing in Latin America in one of the main sectors included in the BRI architecture, railways, has faced significant challenges: only one of four Chinese potential railway projects in Latin America has materialised. The purpose of this paper is to explore these challenges and to provide an explanation focusing on the importance of the “domestic politics” factor.Design/methodology/approachThe paper proposes a comparative study of four cases, developing a qualitative analysis based on an in-depth review of the literature and primary and secondary sources of information.FindingsThe findings suggest that domestic politics played a significant role in the outcomes of the Brazil–Peru Bi-Oceanic railway (changes in government), in Argentina's Belgrano Cargas modernisation project (multiple “domestic politics” factors, such as a presidential campaign), in Venezuela's failed Tinaco-Anaco high-speed train project (authoritarian turn/country's stability) and in Mexico's Querétaro-Ciudad de México high-speed train project (corruption and popular contestation). The paper suggests that one should not expect an easy or fast projection of the BRI in the region, at least in the short- and mid-term, because becoming familiar with the domestic politics of Latin American is a complex and gradual task.Originality/valueThe particular impact of the political risks related to domestic politics in the Chinese Foreign Direct Investment (FDI) in Latin America has not been extensively explored, especially in the railway sector. This paper intends to contribute to this literature gap by analysing four cases of Chinese investment in railways in Latin America, an area that has received little attention in the studies of the Chinese FDI in the region, and proposing an explanation of their outcomes focusing on the “domestic politics” factor.

China's Belt and Road Initiative in Latin America: What has Changed?

“…The greatest expectations of the BRI in LAC have revolved around the impact that it can have on infrastructure (Jiang and Mallimaci, 2018, Segundo Parte; Leiva, 2020). The region is characterised by a serious infrastructure gap that is seen as a key factor in economic underperformance.…”

El sistema Tianxia como vínculo clave entre China y América Latina*

“…En consecuencia, la proyección de la Iniciativa de la Franja y la Ruta será a largo plazo y cuenta con múltiples incertidumbres y obstáculos, donde resaltan los riesgos políticos y económicos de la inversión extranjera directa y el financiamiento de proyectos de infraestructura en la región, tomando en cuenta que los períodos de negociación son largos (Leiva, 2020).…”

“…Coincidiendo con el "cambio de época" en América Latina establecido por Bernal-Meza (2019), el cual se caracteriza por una crisis de la integración regional, el declive del liderazgo brasileño -y su incapacidad de alcanzar una posición de igualdad más favorable dentro del esquema BRICS-y nuevas convergencias de corte más liberal, los riesgos para la inversión China se hacen presentes ante cambios de gobierno y las condiciones de negociación, crisis políticas y sociales en los propios países, así como crisis económicas más amplias. A ello se suma la incertidumbre de las empresas chinas frente a su desconocimiento de las especificidades de cada uno de los países en su condición de "recién llegado a la escena de inversión global (Leiva, 2020).…”