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Foreign Direct Investment and Strategic Minerals

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  • Tanguy Bonnet

Abstract

This paper investigates the links between strategic minerals and foreign direct investment. I contribute to the literature on the FDI-resource curse by studying strategic minerals, the fundamental raw material of the energy transition.The paper presents a precise overview of strategic minerals, their uses, and the geographical distribution of mineral production. This presentation highlights the novelties and peculiarities of strategic minerals which, due to their plurality, complexity and interdependencies, represent an energy commodity quite different from hydrocarbons, but of capital interest for the needs of the energy transition. The econometric study in panel data at the macroeconomic level allows to find the results of the literature, namely a negative relationship between foreign direct investments and the presence of hydrocarbons, the FDI-resource curse. The core of my results contributes to the literature by showing a positive relationship between FDI and the presence of strategic minerals. Strategic minerals thus escape the FDI-resource curse. These results can be explained by the new and particular characteristics of strategic minerals which represent new stakes and do not obey the same rules as hydrocarbons. The paper therefore discusses the ambiguous economic consequences of this positive relationship between minerals and foreign investment.Finally, the paper raises the consequences in terms of geopolitical strategies around strategic minerals issues, in terms of production, needs and energy sovereignty, and highlights China's global strategy and foresight.

Suggested Citation

  • Tanguy Bonnet, 2023. "Foreign Direct Investment and Strategic Minerals," EconomiX Working Papers 2023-7, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2023-7
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    File URL: https://economix.fr/pdf/dt/2023/WP_EcoX_2023-7.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    strategic minerals; foreign direct investments; resource curse;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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