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Geopolitical risk developments and the minerals industry

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  • Raputsoane, Leroi

Abstract

This paper analyses the reaction of the minerals industry to geopolitical risk developments in South Africa. This is achieved by augmenting a Taylor1993 rule type central bank monetary policy reaction function with the indicator of geopolitical risk. The results provide evidence of a statistically significant effect of an increase in geopolitical risk on output of the minerals industry, which initially decreases and bottoms out after 5 months, followed by a slight recovery and another decrease, where output of the minerals industry bottoms out again after 13 months, the effect of which is statistically significant between 12 and 14 months. The results further show no statistically significant effect of output of the minerals industry on geopolitical risk implying a unidirectional nexus between these indicators. The results are consistent with the hypothesis that elevated geopolitical risk undermines cross national consumer, business and investor confidence, consequently culminating in depressed economic conditions. Geopolitical risk is important for economic activity, hence policymakers should monitor developments in geopolitical conditions to support economic growth as well as the minerals industry.

Suggested Citation

  • Raputsoane, Leroi, 2025. "Geopolitical risk developments and the minerals industry," MPRA Paper 124375, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:124375
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    More about this item

    Keywords

    Geopolitical risk; Minerals industry; Economic cycles;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources

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