Exorbitant Privilege of the Periodic Table? Geoeconomics, Endogenous Centrality and Strategic Minerals for the Green Transition

Josh Kirk, Evgenia Passari and Helene Rey

No 35497, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Trade networks underpinning the energy transition are endogenous economic objects, and their structure is a source of market power. Using bilateral trade data for thirteen electrification metals over 1995–2023, we show that trade in these materials has reorganised into a hub-and-spoke system centred on China, in sharp contrast to the more diffuse, multilateral structure of fossil fuels. This centrality did not follow from resource endowments: China holds few of the underlying reserves. It was built through processing investment, industrial policy, and commodity-targeted development finance, an equilibrium outcome rather than a geographical accident. We formalise this logic in a stylised model in which a country chooses how central to become, and show that centrality can map into pricing power: the response of the world price of critical minerals to a supply cut is stronger when the network is more concentrated, the downstream demand and the competitive fringe supply are more inelastic. Constructing text-based, commodity-specific supply shocks and estimating local projections, we find that supply contractions in critical metals raise consumer inflation in the European Union and the United States by roughly twice as much as comparable fossil-fuel shocks, and more persistently. Centrality is therefore not merely a descriptive feature of the new resource map: it can create leverage over global prices. The green transition reduces strategic dependence on hydrocarbon exporters but reconstitutes it around the architecture of mineral supply chains.

JEL-codes: F49 F50 F60 (search for similar items in EconPapers)
Date: 2026-07
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