Trade Openness in Latin America and Its Impact on the Terms of Trade: A Panel Data Analysis

The objective of this study is to explore recent signs of a reversal in the terms of trade of Latin American economies over the past four decades. Furthermore, we analyze the effect of the region’s exports to China during the period of 2000 to 2019. Our findings reveal a positive and significant impact of trade openness and trade with China. This suggests substantial gains from trade with China, primarily driven by the significant expansion of exports. One benefit of this expansion is its role in reducing the sensitivity of Latin American economies to fluctuations in the barter terms of trade.