Geological Endowment vs Institutional Endowment: Comparative Critical Minerals Regimes and Capability Formation

Description

Abstract

Critical minerals policy is often framed as a problem of geological endowment and short-run economic stimulus. This paper argues that such framings miss the primary channel through which critical-minerals strategies succeed or fail: institutional endowment. Countries convert mineral potential into downstream capability, resilience, and bargaining power through coherent critical-minerals regimes—bundles of instruments that allocate control rights, assure demand, share risk, coordinate infrastructure and permitting, govern routing rules, and build technological capabilities. The paper distinguishes conventional “induced” impacts (household-spending multipliers) from institutionally induced effects, in which policy changes alter the feasible set of private strategies and thereby create new markets, contractible supply corridors, and industrial adjacencies. A comparative framework is developed linking instruments to four mechanisms—bankability, coordination, market creation, and clustering—and to observable outcomes beyond “jobs,” including downstream capacity additions, firm entry and supplier density, trade-pattern shifts, vulnerability metrics, and bargaining-leverage events. The framework is applied via structured comparison and process tracing across three regimes: Japan’s market-making approach (risk-sharing and stockpiles), China’s Baotou-centered zone-and-control model (spatial coordination with consolidated oversight), and Canada’s emerging alliance-and-security posture (with an outer-boundary defence-led scenario used as a diagnostic stress test). The analysis clarifies why some strategies generate durable capability formation while others produce mainly cyclical, upstream multipliers, and it provides an operational Institutional Endowment Index to support replicable cross-case evaluation.

Other

Critical minerals; industrial policy; economic security; supply-chain governance; institutional endowment; special economic zones; stockpiling; offtake agreements; risk-sharing finance; clustering; global value chains; trade controls; resource governance; resilience.
JEL: L52, Q38, F13, F52, O25, R11, D74, L14

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