Previous Events
10. March 2025, 16:00 until 17:30
Economic Theory & Policy Seminar / Harald Fadinger (Univ. Vienna) / Industrial Policy in Supply Chains and Directed Technological Change: Evidence from Rare Earths
Seminar
Harald Fadinger, opens an external URL in a new window (University of Vienna)
"Industrial Policy in Supply Chains and Directed Technological Change: Evidence from Rare Earths"
Industrial policies, traditionally aimed at boosting the competitiveness of protected sectors, can inadvertently drive productivity growth in downstream sectors abroad. We document this mechanism using the case of rare earth elements (REE) – critical inputs for manufacturing and the green transformation, with production highly concentrated in China.
To assess the importance of REE across industries, we construct an input-output table incorporating individual REE inputs. Using data on REE-related patents classified by a large language model and sectoral TFP, we show that the introduction of REE export restrictions by China led to a global surge in innovation in REE-intensive downstream sectors outside of China. Additionally, exports by these sectors increased, following the adverse REE supply shock. To rationalize these findings and quantify the global impact of the Chinese REE policies, we develop a quantitative general equilibrium model of trade and directed technological change. Under endogenous technologies, input-supply restrictions shift the direction of innovation in downstream sectors toward scarce inputs when inputs are gross complements, which can lead to the expansion of these sectors.
Event details
- Event location
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TU Wien
1040 Vienna
Wiedner Hauptstr. 8-10, Seminarroom: DA grün 04 (4th floor, green area) - Organiser
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ECON
Julia Hutter
julia.hutter@tuwien.ac.at - Public
- Yes
- Entrance fee
- No
- Registration required
- No