Indonesia’s ban on unprocessed nickel ore exports is often cited as the first successful case among commodity-dependent economies in the Global South to upgrade its position within global value chains. Yet, it remains uncertain how replicable the “Jakarta Model” is. This paper evaluates under which conditions Global South countries can successfully use export controls and downstreaming to exert strategic agency in critical minerals value chains. A multimethod design is employed, combining process tracing with: (1) an event study of nickel price reactions to Indonesia’s export ban announcements; (2) a quasi-experimental analysis of FDI flows in nickel processing, comparing Indonesia to a counterfactual “Synthetic Indonesia;” and (3) a trade composition analysis tracing the shift from ore exports to value-added products, along with changes in key import partners. The findings suggest that Indonesia’s success in exercising strategic agency and forcing foreign investments hinged on market power, policy credibility, infrastructure readiness, and capital depth. A Downstreaming Readiness Index is introduced and applied to the Philippines, Zimbabwe, Namibia, and the DRC, revealing that none of these countries meets all the conditions necessary for geoeconomic agency. As such, this paper extends IPE debates on resource nationalism, global value chains, and geoeconomics while providing a transferable framework to assess the opportunities and constraints facing Global South actors in the critical mineral era.
Panourgias et al. (Sun,) studied this question.