Extractive Industries and Corruption: Investigating the Effectiveness of the EITI as a Scrutiny Mechanism
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Date
2016-10-12
Authors
Kasekende, Elizabeth
Abuka, Charles
Sarr, Marr
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
Anecdotal evidence and resource curse literature suggest that many countries have
failed to exploit their natural resource wealth to finance the growth of their economies.
Developing countries appear to be most affected. It is believed that poor governance,
lack of transparency, poor accountability to their citizens, and corruption are the main
culprits. In 2002, an international initiative sponsored by the UK government and backed
by activist groups launched the extractive industries transparency initiative (EITI) with
a view to mitigating the potential negative effects of resource wealth. The objective
of this study is to investigate the effectiveness of this initiative that has gained much
traction over the past decade as a scrutiny mechanism that fosters corruption control. In
particular, this paper addresses two key questions: First, what are the observable factors
that lead a country to voluntarily join the EITI? Second, do members of the EITI show
greater improvement in corruption control relative to non-members? Our results indicate
that poor countries and countries perceived as corrupt are more likely to join the EITI to
signal their commitment to greater transparency and to improve their investment climate.
Furthermore, the results suggest that corruption scores have so far not improved as a result
of EITI membership using the control of corruption index developed by the World Bank.
Description
Keywords
EITI, , corruption, , extractive industries