Critical minerals and industrial policy: a network-based approach to supply chain risk

Thiemo Fetzer and Peter John Lambert

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Policy debates on ‘critical minerals’ have multiplied faster than our empirical tools for identifying which products are system-critical. Most existing lists are expert-driven and static; they say little about how upstream raw materials and downstream technologies are knit together in global production networks, or about the asymmetric roles of large demand and supply hubs. This paper proposes a network index of criticality (NIC), built from trade data and a directed production network, that integrates (i) a product’s share in world trade, (ii) exporter and importer concentration, and (iii) its position in a product-input network. Criticality here refers to systemic exposure encoded in tradeable production networks; it is not a welfare metric and it is not a measure of physical scarcity. We show that NIC aligns with revealed policy attention in official critical-mineral lists. We then construct three families of counterfactuals that remove China, the United States, or the European Union from trade on either the export (supply) or import (demand) side. These scenarios yield product-level diagnostics of hub dependence and map directly to policy instrument choice (e.g. recycling standards, permitting and processing investment, strategic reserves, or trusted-partner agreements).

Keywords: climate action; critical minerals; industrial policy; production networks; supply chain resilience; trade concentration (search for similar items in EconPapers)
JEL-codes: F10 F40 F50 L60 O30 Q40 Q50 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2026-08-04
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Published in Oxford Review of Economic Policy, 4, August, 2026, 42(1), pp. 193 - 211. ISSN: 0266-903X

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