The New Resource Curse
The growing global demand for critical minerals such as lithium, cobalt, and rare earths is reshaping geopolitical dynamics and economic risks, echoing but exceeding the volatility seen during the oil era. Unlike oil, the critical minerals boom involves more complex supply chains, technological uncertainty, and weaker global governance structures. The article warns that resource-rich developing countries may face new versions of the 'resource curse' due to institutional weaknesses and market instability.
- ▪Demand for lithium increased by nearly 30 percent in 2024, significantly outpacing its average growth during the 2010s.
- ▪Prices for heavy rare earth elements like dysprosium and terbium have more than tripled since 2020 due to their importance in electric motors and military technology.
- ▪The International Energy Agency projects that by 2040, global demand for lithium will be five times higher than in 2020, with sharp increases also expected for cobalt and rare earths.
- ▪Resource-rich developing nations face risks of elite capture, Dutch disease, and failed economic diversification as they confront sudden mineral wealth.
- ▪Unlike the oil era, the critical minerals era lacks strong multilateral institutions or a stabilizing superpower to manage global market uncertainties.
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The New Resource CurseHow Critical Minerals Will Scramble Geopolitics Rabah Arezki, Frederick van der Ploeg, and Michael Ross April 30, 2026 At a cobalt mining site, Salmon, Idaho, May 2024 Carlos Barria / Reuters RABAH AREZKI is Director of Research at the French National Center for Scientific Research and a Senior Fellow at the Harvard Kennedy School. He previously served as Vice President and Chief Economist at the African Development Bank and as Chief Economist for the Middle East and North Africa at the World Bank.FREDERICK VAN DER PLOEG is Professor of Economics at the University of Oxford and Research Fellow at the Center for Economic Policy Research.
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