Extract H discusses how resource-rich emerging economies have pivoted away from traditional free-market models toward 'resource nationalism' and selective trade restrictions.

Using the data in the extract and your knowledge of economics, assess the view that resource-rich developing and emerging economies should use protectionist policies, such as export restrictions and local content requirements, to achieve economic development.

Extract H

In recent years, several resource-rich emerging economies have pivoted away from traditional free-market export models toward 'resource nationalism'—a form of selective protectionism. For example, Indonesia implemented a complete export ban on unprocessed nickel ore, aiming to force global supply chains to invest in domestic smelting and processing facilities. This policy, known as 'downstreaming,' seeks to break the pattern where developing countries export cheap raw materials and import high-value manufactured goods. Since the ban, billions of dollars in foreign direct investment (FDI) from electric vehicle and battery manufacturers have poured into Indonesia, creating thousands of high-skilled industrial jobs and dramatically raising the value of its exports.

However, this aggressive intervention has sparked intense international friction and domestic economic strains. The European Union successfully challenged the ban at the World Trade Organization (WTO), arguing it unfairly restricts trade. Domestically, small-scale miners suffer because they are forced to sell ore to a limited number of local smelters at government-mandated prices, which are often far below global market rates. Furthermore, the massive energy-intensive smelting plants, heavily reliant on coal power, have caused significant environmental degradation, threatening long-term sustainable development goals. Critics argue that instead of market-distorting export bans, developing nations should focus on supply-side investments in education and infrastructure to attract high-value industries naturally.