David and Goliath? Small Developing Countries, Large Emerging Markets, and South-South Preferential Trade Agreements

Bibliographic Data

ID6273139
AuthorsDaniela Donno (0000-0002-5074-1814, University of Cyprus), Nita Rudra (0000-0003-2336-0562, Georgetown University)
Year2019
Volume63
Issue3
Pages574-588
Publication date2019-09-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueInternational Studies Quarterly (JOURNAL)
Journal identifiersISSN: 0020-8833 • E-ISSN: 1468-2478
PublisherOxford University Press (PUBLISHER • GB)
DOI10.1093/isq/sqz041
OpenAlexW2959869329
LanguageEN
Citations received6
References cited90

Has the rise of large emerging economies influenced the foreign economic policies of smaller nations? Many of the BRICS' (Brazil, Russia, India, China, South Africa) dominance in export markets for low-skilled goods pose a particular challenge for “surplus-labor” countries characterized by large populations of unskilled and underemployed labor. We theorize the incentives of firms and governments in surplus-labor countries to form South-South preferential trade agreements (SSPTAs) as a means of diversifying and expanding trade relationships in the face of this challenge. Of all the BRICS, our findings show that China poses the greatest challenge; the countries forming the most South-South agreements are those whose exports have been most displaced by China. We verify this pattern using both systemic and country-specific measures of the China “shock.” Imports from China, in contrast, have no significant effect on SSPTA formation. Our account, which helps resolve the dual puzzle of declining trade with rich countries and the proliferation of SSPTAs in recent decades, underlines the implications of China's rise on the developing world

China · Developing country · Development economics · Dominance (genetics · Economic growth · Economics · Emerging markets · Incentive · International economics · International trade · Market economy · Political science · Shock (circulatory · Global trade and economics · International Business and FDI · International Development and Aid