The Natural Resources Curse and Critical Raw Materials: Comparing Dependence and Abundance Measures

This paper revisits the Natural Resource Curse (NRC) in the case of Critical Raw Materials (CRM), a strategic input for the energy transition. Using USGS production data for 1970–2019, we distinguish between dependence (CRM production as a share of GDP) and abundance (CRM production per capita). We argue that dependence is endogenous and a misleading proxy of resource endowment. Our cross-sectional model averaging shows no robust impact of CRM on growth, while primary export dependence has only a fragile, time-sensitive negative effect. Panel estimations for 44 countries, using advanced static and dynamic estimators, point to the same conclusion: weak and inconsistent results, with the apparent negative effect of CRM dependence largely driven by endogeneity. Overall, our findings reject the idea of a universal CRM curse. Instead, they highlight how measurement choices and endogeneity critically shape the NRC debate. While appropriate policies should address potential negative externalities and encourage diversification as well as the capture of greater value added along the CRM supply chain, our findings suggest that, to ensure long-term growth, traditional factors–such as human capital accumulation, infrastructure, and institutional quality and stability–should remain central.