Highlights

• New research suggests the 'resource curse' is evolving in the era of critical minerals like lithium, cobalt, and rare earth elements.
• Geopolitical competition and market maturity significantly impact whether mineral wealth benefits or destabilizes national economies.
• Resource-rich countries must develop robust governance and transparent strategies to transform critical minerals into sustainable economic growth.

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A fresh study by Juergen Braunstein (Harvard Kennedy School / London School of Economics) and Marina Chuchko, published in Energy Research & Social Science (opens in a new tab) (August 2025), sounds the alarm: the “resource curse”—once shorthand for oil-rich nations that stumbled into economic dysfunction—may be reborn in the age of lithium, cobalt, copper, and rare earth elements.

The Study and Its Findings

The authors argue that it’s not just domestic mismanagement that determines whether resource wealth helps or harms. External forces—geopolitical competition and the maturity of commodity markets—are just as decisive. Through case studies in Indonesia (nickel), Chile (copper), the Democratic Republic of Congo (cobalt), and Argentina (lithium), they demonstrate how different mixes of geopolitics and market maturity create divergent national outcomes.

Indonesia, tethered to Chinese state-backed nickel investments, has leveraged its ore ban into a downstream boom. Chile, with a mature copper market and disciplined fiscal rules, shows how to tame volatility. But the DRC remains a cautionary tale: opaque deals and fragile institutions keep cobalt revenues from translating into broad development. Argentina’s free-market lithium dash, meanwhile, risks locking the country into volatile cycles unless it builds stabilizers.

Implications for the Critical Mineral Era

The takeaway is blunt: as the clean-energy transition accelerates, resource-rich states are not automatically positioned for success. Immature markets for lithium and rare earths mean volatility and thin risk-management tools. Meanwhile, geopolitical “friend-shoring” strategies by the U.S., EU, and China place exporting countries under immense pressure, often leaving them with fewer policy levers than headlines suggest.

For investors and governments alike, this study is a warning shot. Commodity windfalls can just as easily destabilize economies as enrich them. Without robust governance, transparent contracts, and mechanisms like stabilization funds or stockpiles, mineral wealth may once again turn into a trap.

Limitations of the Framework

While Braunstein and Chuchko’s Resource Curse Trade-Off Matrix offers a powerful lens, it is still a conceptual framework rather than a tested predictive tool. The study leans heavily on four case studies, which may not capture the full global spectrum of critical mineral dynamics. And although external factors are emphasized, the enduring importance of internal governance quality cannot be overstated—something investors know well when evaluating frontier-market exposure.

Conclusion

The study reframes the debate: the new curse of critical minerals lies not only in weak domestic institutions, but also in the volatile interplay of geopolitics and market immaturity. For nations of the Global South, the challenge is to turn strategic minerals into engines of sustainable growth, not into the latest chapter in a decades-old curse.

Citation: Juergen Braunstein & Marina Chuchko. “Resource curse in the age of critical minerals: Geopolitical forces and market maturity.” Energy Research & Social Science, Vol. 121, August 2025. DOI: 10.1016/j.erss.2025.104247

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