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Keywords:

  • Dutch disease;
  • Factor proportions;
  • International trade;
  • Intra-industry trade;
  • Metals;
  • Minerals;
  • Mining;
  • Resource curse;
  • South–South trade

Abstract The increase in mineral price volatility since 1970 and worries about the impact of rapidly growing mineral exports on the economic growth of developing countries have created recent interest in mineral trade flows and policies. This paper provides a review of current thinking on the economics of international trade in mining products. Despite mining products’ importance in early formulations of trade theory, there have been relatively few studies that have specifically examined mining product trade flows. The limited evidence that exists supports the idea that factor endowment differences explain much mining product trade. There is some apparent South–South and intra-industry trade in mining products, but we find no need to resort to the ‘new trade theory’ to explain this. Given worries of substandard growth and development in mining-based economies, trade policies have been used to try to accelerate the movement towards resource-based manufacturing. In the light of recent evidence that mining product exporters have not suffered in the long-run from mining activity, these policies are likely to have been unwarranted. Nevertheless, there is some evidence that the more closed mining economies have had faster growth than the open mining economies, reflecting correction of a political economy trap that causes open mining economies to under-invest in education.