Resource nationalism: the intersection of politics and economics

Resource nationalism is increasingly prevalent in resource-rich nations across South America, Africa, and Southeast Asia, driven by the growing global demand for critical minerals essential for technological advancements and the energy transition. This surge in demand, coupled with geopolitical tensions and economic nationalism, has led to significant price volatility and increased competition over resource rents. While numerous studies have explored the motives behind resource nationalism—including resource power, national self-determination, fiscal dependence, and corruption—a comprehensive understanding from a transnational perspective remains lacking due to the heterogeneity of resource-rich countries. This paper addresses this gap by constructing a national-scale dataset on resource nationalism and employing quantitative analysis to identify common factors. The contrast between lagging economic growth and abundant resources in many countries of the Global South has made minerals and energy frequent tools in resisting economic inequality. This study aims to understand the driving forces behind resource nationalism, particularly the interplay of political, economic, and social factors, to offer insights for building a more resilient global resource governance system. The research utilizes a two-tier game theory framework to analyze the cyclical nature of resource nationalism and constructs a new global-scale dataset to enrich data-driven studies on the topic. The paper examines the relationship between lagging economic growth, resource endowments, and the recurrence of resource nationalism, acknowledging the complexities of historical, cultural, political, and economic structures.

Existing literature offers diverse perspectives on resource nationalism, examining its motives and consequences from various angles. Studies highlight the roles of resource power, national self-determination, fiscal dependence, political elections, economic speculation, and corruption. However, the heterogeneity of political, economic, cultural, and social structures in resource-rich countries makes it challenging to generalize the phenomenon. While some research emphasizes national ideologies and extractive histories, a growing trend points to the increased role of economic motives, particularly the shift toward maximizing government revenues and economic development from extractive FDI. The literature also acknowledges the complex interplay of interests among various actors, including host countries, international resource companies, and domestic interest groups. The existing literature often lacks a comprehensive global perspective, struggling to account for the diversity of national contexts and the intricate interaction of political, economic, and social factors driving resource nationalism. Some studies have explored the cyclical nature of resource nationalism, linking it to changes in global commodity prices and domestic political dynamics, but more research is needed to fully quantify the relative importance of these factors. Previous studies have examined the consequences of resource nationalism, often focusing on its potential impacts on foreign investment, economic growth, and global supply chains. However, a detailed analysis of the two-tiered game dynamic, integrating both domestic and international political and economic forces, remains largely unexplored.

This study employs a two-tier game theory framework to analyze the "emergence, climax, decline, and reemergence" of resource nationalism, focusing on commonalities among countries and the driving role of economic factors. A new global-scale resource nationalism dataset is constructed using data from various sources, including the U.S. Geological Survey (USGS) Minerals Yearbook, industry associations (ICMM, IUCN), academic papers, and government publications. The dataset encompasses 261 resource nationalism events since 1990, encompassing 35 aspects across six dimensions of policy intervention (export controls, property rights uncertainty, operational interventions, geopolitical interventions, local protectionism, and environmental and social disruptions). The core methodology is a binary choice Logit regression on panel data using maximum likelihood estimation. The dependent variable, RN, indicates whether a resource nationalism policy was in place (1) or not (0) for each country in a given year. Key explanatory variables include the global metal price index (metal.price), reflecting the impact of global commodity prices, various political variables representing domestic political dynamics (rule of law, government efficiency, ruling party ideology, and democratization index), and economic variables signifying host country economic circumstances (real GDP growth rate, national income level, natural resource rents as a percentage of GDP, and the proportion of oil, ore, and metal exports in merchandise exports). The model also considers interactions between economic and political factors. In addition to the logit regression, the study uses XGBoost, a machine-learning algorithm, to identify key factors influencing resource nationalism events, further enhancing the robustness of findings. Data sources for economic, political, and social indicators include the World Bank's World Development Indicators (WDI) and Our World in Data. To ensure the independence of training, testing, and validation sets in the machine learning analysis, the researchers utilize a stratified sampling technique that groups entities (countries) rather than individual data points.

The quantitative analysis yields several key findings. First, rising global resource prices are confirmed as the primary trigger of contemporary resource nationalism. Second, the domestic political game within resource-rich countries is identified as an intrinsic driving factor in the generation of resource nationalist policies. The analysis shows that the year following a change in the ruling party is associated with a peak in resource nationalist events. However, the presence of a nationalist ruling party itself does not significantly increase the likelihood of such events, suggesting that such actions are strategically timed to enhance the political standing of the party in power. Third, the study supports the hypothesis that resource countries' reliance on mineral wealth drives resource nationalism. The findings indicate that a higher dependence on natural resource rents increases the likelihood of resource nationalist policies. Moreover, economic growth in resource countries is found to positively correlate with resource nationalist policies, indicating that such policies are not merely reactive measures to economic downturns but are opportunistic attempts to capture excess profits from rising global resource prices. The model incorporating interaction terms between political ideology and other variables reveals that left-wing parties are more inclined to implement resource nationalism policies, especially during election years and under efficient government systems, reflecting their tendency towards greater government intervention in the economy. Heterogeneity analysis demonstrates that resource nationalism events are unevenly distributed across countries, concentrated in low-income countries with significant resource endowments. Geographical distribution reveals higher incidence in Southeast Asia, South America, and Africa. Finally, analysis of the types of minerals suggests that while there is no significant difference across metals, clean energy metals (lithium, cobalt, copper) show an increasing trend in resource nationalism occurrences after 2008, and non-energy minerals experienced an increased likelihood of events, particularly during the 2000-2012 metals supercycle. Robustness checks, including dataset modifications and machine learning analyses, corroborate the main findings.

The study's findings provide a nuanced understanding of resource nationalism, highlighting the intricate interplay between global market forces and domestic political and economic conditions. The results demonstrate that resource nationalism is not simply a zero-sum game, but a strategic interaction between resource-rich countries and international companies, involving negotiations over the distribution of resource rents. The findings emphasize the need for international resource companies to adapt their strategies to mitigate investment risks associated with resource nationalism, highlighting the importance of having strategic reserves to manage the uncertainties of this complex game. The study's conclusion that resource nationalism represents an attempt by resource-rich countries to secure a greater share of the economic benefits from their natural endowments challenges the simplistic view of it as a purely negative phenomenon. The results underscore the need to consider the underlying economic imbalances in the global trading system that contribute to resource nationalism. While resource countries aim to maximize their resource rents, their actions can negatively impact the global supply chain for critical minerals.

This research contributes to a deeper understanding of resource nationalism by integrating economic and political perspectives through a two-tier game theory framework and a comprehensive global dataset. The findings highlight the significant role of rising mineral prices, domestic political dynamics, and the dependence of national economies on resource wealth in triggering resource nationalist policies. The study emphasizes that resource nationalism is not a zero-sum game but a complex interaction influencing the distribution of resource rents. Future research could explore the long-term economic and social consequences of resource nationalism in various contexts and investigate strategies for more equitable and sustainable resource governance.

The study's findings are based on a specific dataset and methodology. The definition of "resource nationalism" is inherently complex and subjective, and different operationalizations might lead to variations in the results. While the study controls for several factors, there might be other unobserved variables influencing resource nationalist policies. The analysis focuses on national-level events and may not fully capture the nuances of sub-national or local-level dynamics. The analysis primarily focuses on minerals; the results might differ for other resources like oil and gas. The model relies on publicly available data, which may be incomplete or biased, particularly in countries with limited transparency.