TLDW

Resource-based economies control the essential raw materials needed for manufacturing and high-tech industries. This gives them leverage over nations that rely on these resources. China’s dominance in gallium production is a great example as it’s essential for making advanced semiconductors.

Real power resides at the top of supply chains, where raw materials originate. Controlling these resources allows countries to dictate terms and disrupt industries further down the chain.

Sanctions enacted by higher-level supply chain economies often fail because resource-based economies can retaliate by restricting access to essential raw materials. This renders sanctions ineffective and can even harm the sanctioning nation’s economy.

BRICS economies, who control many of the essential resources, will continue to develop domestic industries to process and utilize their own resources. Doing so reduces reliance on imports and creates new economic opportunities.

Access to critical raw materials provides a significant advantage in developing and manufacturing key technologies like semiconductors, telecom equipment, and renewable energy systems. This ultimately leads to technological leadership and economic dominance in those sectors as we’re seeing happening with China.

Economies higher up the supply chain become vulnerable to disruptions and price fluctuations caused by resource-based economies. This dependence weakens their negotiating power and hinder their economic growth in the long run.