A model for trust building: The state, market, and cultural norms in Sino-Chilean economic exchange

Abstract

The Free Trade Agreement (FTA) between the People’s Republic of China (PRC) and Chile came into effect in 2006. The complementarities of both nations’ economies, their shared profile as export–oriented countries, the shared institutional framework and their diplomatic history forecasted a promising future of cooperation. Yet, expectations have hardly been fulfilled.
Based on the analytical framework provided by trust theories –a culturally-shaped variable– and on the empirical support given by an extensive fieldwork, this dissertation explains why Sino-Chilean economic cooperation has not flourished as expected.
For this, it explores the sources of international –between states– and transnational –between business and corporations– trust. The findings show the pivotal role trust has played in their economic foreign policy and how they have used it as a strategy to fulfill their national interests. Although the results demonstrate that both states have engaged in a trust-building process, the trust constructed is nevertheless narrow and weak, since it is bounded to particular objectives, especially from the strongest party.
At a transnational level, the dissertation analyzes the main sources that are framing trust-building, which embrace market, cultural and institutional variables. Based on this, it is argued that trust entails a paradox: although it is a necessary condition for mutual growth and a source of economic benefits, building trust can be costly to acquire and maintain, given the structure in which is embedded. Finally, the research tackles the process of transnational trust building carried out by the main actors.
Through the examination of the case study, this research illustrates the nuances of the trust-building process, portraying trust as a complex but necessary variable for economic development, and by doing this, offering a novel view on the role culture plays on growth.