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Breaking the Resource Curse: Transparency in the Natural Resource Sector and the Extractive Industries Transparency Initiative

Transparency a panacea for resource rich countries? - A new empirical analysis shows mixed results with regard to the effectiveness of the Extractive Industries Transparency Initiative (EITI).

The EITI is one of the most well-known transparency initiatives in the extractive sector worldwide and has been repeatedly scrutinized by researchers. But even after more than 10 years since the EITI was launched by UK’s then Prime Minister Tony Blair it is hard to tell how effective the initiative in fact is. The article makes an attempt to assess EITI’s effectiveness focusing on two important aspects: economic development and quality of governance. A minor drawback of this panel study is that it does not take into account the recent changes the EITI has gone through, which resulted in the adoption of a new and more ambitious EITI Standard in 2013.

Abstract

This article critically examines the impact, up until 2009, of the Extractive Industries Transparency Initiative (EITI). The EITI is an international policy intervention that aims to mitigate the negative effects of resource abundance by promoting the transparency of resource revenues and accountability of the governments of resource rich states. Its effectiveness can be assessed by examining two outcomes that are suggested to be negatively affected by resource abundance: economic development and quality of governance. Through a panel study, including approximately 200 countries, the influence of the EITI in these two areas is examined. Results suggest that the negative effect of resource abundance on GDP per capita, the capacity of the government to formulate and implement sound policies and the level of rule of law is mitigated in EITI countries. However, the EITI has little effect on level of democracy, political stability and corruption. The study concludes that there are some early indications that the EITI has been successful in protecting some nations from selected elements of the resource curse. This is encouraging given the relatively short time period since the founding of the EITI, however the mixed results suggest that a similar study should be repeated in 5 to 10 years when EITI policies have had enough time to fully take effect.

Reference

C. Corrigan, "Breaking the Resource Curse: Transparency in the Natural Resource Sector and the Extractive Industries Transparency Initiative", Resources Policy 40, S. 17–30  (2014).

Author : Corrigan, Caitlin C.

05 Nov 2014


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ABOUT THE REVIEWER

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BERTA VAN SCHOOR

Institution(s): Technical University of Munich, Pforzheim University. Research Field: multi-stakeholder anti-corruption initiatives and business ethics Read More...

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