From mines to markets: Gravity model insights on critical raw material trade

Frederik Stender and Tim Vogel

No 17/2025, IDOS Discussion Papers from German Institute of Development and Sustainability (IDOS)

Abstract: Access to critical raw materials (CRMs) is increasingly being shaped by geopolitical dynamics, fuelling a global competition for supply security. This paper applies the gravity model of trade to examine how OECD countries leverage Aid for Trade (AfT), Bilateral Investment Treaties (BITs), and Preferential Trade Agreements (PTAs) to influence CRM imports from developing countries. Using extensive bilateral panel data from 1995 to 2023, we find that PTAs are particularly effective, affecting both the intensive and extensive margins of trade. These findings highlight the strategic role of formal trade agreements and suggest that a coordinated policy mix of trade diplomacy, investment, and aid is essential for resilient and diversified CRM supplies.

Keywords: Aid for Trade; Bilateral Investment Treaties; critical raw materials; extensive margin; intensive margin; gravity model; Preferential Trade Agreements (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 F21 F35 F53 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:diedps:320560

DOI: 10.23661/idp17.2025

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