Highlights

• New academic study reveals the strategic importance of rare earth elements in international trade and technological development.
• Countries can gain trade leverage by investing in downstream industries like EVs, electronics, and renewable energy technologies.
• Technological sophistication and industrial depth are key to success in the global rare earth metals market.

A new academic study by students (Gizamova Milena F and Larikova Elizaveta M) at Ural Federal University (opens in a new tab) sheds light on the growing strategic role of rare earth elements (REEs) in global trade and industrial policy. The paper, titled The Impact of Rare Earth Metals on International Business and Trade Between Countries (opens in a new tab), uses econometric modeling and panel data from 120 countries to link a nation’s rare earth trade openness with its technological sophistication, R&D investment, FDI inflows, and population size.

Key findings suggest that countries exporting raw REEs capture limited value, while those that develop midstream and downstream capabilities—like refining and high-tech applications—are positioned higher in global value chains. China’s vertical integration strategy, from mining to magnet manufacturing, has allowed it to dominate both trade volume and value-added. In contrast, countries lacking domestic REE reserves can still gain leverage by investing in downstream industries like EVs, electronics, and renewable energy technologies.

Importantly, the authors argue that technological sophistication is the strongest predictor of trade success, especially in downstream segments where REEs are used in advanced manufacturing. The paper recommends policies such as R&D subsidies, FDI-friendly regulation, and beneficiation mandates to help nations climb the value chain and reduce reliance on Chinese supply.

With global demand for REEs continuing to surge and geopolitical competition intensifying, this study reinforces the need for nations to pair resource security with industrial depth.