Geopolitics and rare earth metals

John Hua Fan, Akihiro Omura and Eduardo Roca

European Journal of Political Economy, 2023, vol. 78, issue C

Abstract: Rare earth elements are critical in the production of consumer products, renewables, and green, industrial, and defense products. Using more than thirty years of Japanese import data, we document statistically significant relationships between geopolitics and rare earth metals. We find that the import price per unit of rare earth metals is positively related to geopolitics, while gross import values are negatively related. The negative relationship in the import value appears strongest for rare earth metals sourced from China. Given the strategic and economic significance of rare earth metals, our findings shed light on the economic implications of geopolitical tensions in the decades to come. For users of rare earth elements, an effective risk management program could add value in times of high geopolitical tension. We also highlight rare earth elements’ value as a diplomatic tool for global policymakers.

Keywords: Geopolitical risk; Rare earth markets; International trade; Japan; China (search for similar items in EconPapers)
JEL-codes: F14 F5 G15 Q02 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:78:y:2023:i:c:s0176268022001598

DOI: 10.1016/j.ejpoleco.2022.102356

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