The opening of China to the rest of the world that started under the reforms of Deng Xiaoping has been characterized by some as the awakening of the sleeping giant. Indeed, China is a big country, and the addition of its abundant endowment of unskilled labor to world factor supplies might easily have had a negative effect on other providers of unskilled-labor intensive goods. Nevertheless, the effects on individual countries may be complex, because China not only created a greater supply of labor intensive goods but also created greater demand for many commodities produced by other developing countries. A study by Jörg Mayer and Adrian Wood calculate that as big as China is, the balance of these effect on others was not substantial.
What factors can you suggest that would explain the regional pattern of effects that they report?
Table 1. Changes in logged ratios of
labour-intensive manufacturing to primary output and exports,
1980-2000, unweighted regional averages
| Output (33 countries) | Exports (differences) | ||||
| 1980-1990 | 1990-2000 | Difference | For 33 countries | For 70 countries | |
| All developing countries | 0.14 | 0.08 | -0.06 | -0.21 | 0.07 |
| East Asia (except China) | 0.43 | 0.24 | -0.19 | -0.45 | -0.34 |
| South Asia | 0.00 | 0.29 | 0.29 | 0.04 | -0.05 |
| Latin America and Caribb | 0.10 | -0.07 | -0.17 | 0.69 | 0.39 |
| Middle East and N. Africa | 0.21 | 0.07 | -0.14 | -1.00 | -1.19 |
| Sub-Saharan Africa | -0.08 | 0.08 | 016 | -0.59 | 0.45 |
Source: Wood and Mayer (2009), Table 5.