Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/109947
Authors: 
Pothen, Frank
Fink, Kilian
Year of Publication: 
2015
Series/Report no.: 
ZEW Discussion Papers 15-025
Abstract: 
We investigate why governments restrict exports of exotic raw materials taking rare earth elements as a case study. Trade restrictions on exotic materials do not have immediate macroeconomic effects. Relocating rare earth intensive industries is found to be the main reason behind China's export barriers. They are part of a more extensive strategy aiming at creating comparative advantages in these sectors and at overcoming path dependencies. Moreover, export barriers serve as a second-best instrument to reduce pollution and to slow down the depletion of exhaustible resources. Growing domestic rare earth consumption renders those increasingly ineffective. Rising reliance on mine-site regulation indicates that this fact is taken into account. Rare earth extraction is dominated by a few large companies; the demand side is dispersed. That speaks against successful lobbying for export restrictions. It appears as if the export barriers are set up to compensate mining firms.
Subjects: 
Rare Earths
Export Restrictions
Political Economy
JEL: 
Q37
Q38
D78
P26
Document Type: 
Working Paper

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