The Geopolitical Factor of Belt and Road Initiative in Latin America

Abstract

In the context of Chinese growing influence in Latin America, the purpose of this paper is to analyze how geopolitical factors impact the Belt and Road Initiative (BRI) implementation within the region. Specifically, this paper illuminates how Brazil and Mexico, the two largest economies in Latin America, have different predispositions towards their relationships with China. Through the review of secondary sources, this paper sets the background to analyze the geopolitical factor of the BRI in Latin America, which is complemented by the use of international databases to contrast how the US factor has molded the relationships between these countries. Finally, a comparative case study method is used to illustrate how geopolitics have influenced the Chinese investment possibilities in both economies. Although China's presence in Latin America through investments, trade, loans, and official development aid, has grown, we conclude that the United States influence is still a relevant factor to understand the differences between bilateral relationships amongst Brazil-China, and Mexico-China. This particular finding emphasizes the importance of geopolitics on BRI’s implementation in Latin America.

Global cities and multilatinas: the search for global cities-specific advantages, establishment and ownership entry modes

“…They addressed the institutional benefits brought by GC. Finally, multilatinas' use of GC confirms Bustamante et al (2021), who claimed that (Kavusan et al, 2016;Belderbos et al, 2020) P5: Country of origin offers no impact in entry mode selection Multilatinas leapfrog stages to catch up with multinationals from developed economies (Luo and Tung, 2007) and use mergers and acquisitions (M&As) and joint ventures (JVs) to speed up their internationalization process (Wei et al, 2015) P6: Country of origin presents no impact in the selection of ownership mode Mexican multilatinas provide an exception regarding ownership modes because of their trade and FDI relationship with the USA (Montoya et al, 2019) P7: Resource-seeking is the main reason for the internationalization of multilatinas through GC MNEs are attracted to global sites to lower LOF (Belderbos et al, 2020) P8: Multilatinas internationalize through alpha cities because of market-seeking EMNE opted to locate in a global city because it provided legitimacy, transportation, markets, resources and capital (Meouloud et al, 2019) multinationals pursue positive institutional distance (i.e. internationalizing to a host country where institutions are more robust than those in the home country).…”

“…The results from Table 6 show that Mexican multilatinas provide an exception regarding ownership modes because of their trade and FDI relationship with the USA (Montoya et al , 2019; Valderrey et al , 2022). Strong connections link the Mexican to the US economy, decreasing the institutional distance between the two countries and making the transference easier.…”

Belt and Road Initiative Impact on Bilateral Trade Flows

“…For Latin America for example, this effect is meant to grow stronger in the upcoming years as many infrastructure projects are expected. To reach this, more facilitation are needed from local governments to ensure a win-win trade and cooperation (Carrasco, 2021) and more effort from China's part to overtake historical trade power in the region (Montoya, Lemus, & Kaltenecker, 2020).…”

Mexico’s Trade Relationship with China in the Context of the United States–China Trade war

“…Montoya et al (2019) suggest central aspects that do not allow a more balanced relationship between Mexico and China, not only commercially, but also politically. The authors point out that in the case of Mexico, a core variable is the geopolitical interest of the United States on Mexican territory mainly due to the historical interrelation between both countries and a 3,000 km border that facilitates commercial and socio-cultural exchange.…”