Economic superpowers are racing to control critical minerals in developing economies, fueling conflict, environmental damage, and poverty. In this paper, we first explore what may well constitute a new “critical minerals curse.” We then highlight the institutional dualism that developing countries need to navigate this phenomenon. Specifically, we argue that the challenge for mineral-rich developing countries lies in the balancing act between two distinct types of institutions: outward-facing and inward-facing institutions. Critical minerals also pose new challenges to developing economies, including technological uncertainty and geopolitical tensions that affect demand. This calls for greater fiscal prudence and more rigorous design of extraction and sale contracts to ensure adequate risk sharing between multinationals and governments in developing economies.
