We host different speakers at our Economic Theory & Policy Seminar. 

Upcoming topics and speakers will be posted below.

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 will give a talk at our Economic Theory and Policy 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.

 

 

Calendar entry

Event location

TU Wien
1040 Vienna
tba

 

Organiser

ECON
Julia Hutter
julia.hutter@tuwien.ac.at

 

Public

Yes

 

Entrance fee

No

 

Registration required

No

Economic Theory & Policy Seminar / Harald Fadinger (Univ. Vienna) / Industrial Policy in Supply Chains and Directed Technological Change: Evidence from Rare Earths

Harald Fadinger will give a talk at our Economic Theory and Policy 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.