Governance for sustainability in the extractive industry sector: Addressing the Resource Curse through Global Standard-Setting - Experiences from Indonesia

Abstract

Extractive industries play a pivotal role in shaping contemporary society, yet their governance encounters persistent challenges in resource-rich nations, often exacerbating the resource curse phenomenon. In response, global actors, both state and non-state, have sought avenues towards sustainability as a means to mitigate this curse. One such initiative is the Extractive Industries Transparency Initiative (EITI), a global standard aimed at enhancing governance quality through multi-stakeholder engagement. This thesis focuses on two interconnected research inquiries: the impact of sustainability concepts on extractive industry governance in combating the resource curse, and the efficacy of EITI in fostering sustainability through improved governance, with a specific focus on Indonesia. Employing mixed research methods, including bibliometric analysis, qualitative content analysis of policy documents, and qualitative research such as discourse analysis and case study, the study delves into these questions. Applying discursive and new institutionalism approaches across four analytical frameworks, the thesis contributes to understanding sustainability's dimensions and EITI's role. Firstly, through storyline analysis, it uncovers scholarly perspectives on extractive industry impacts, causal mechanisms, and mitigation strategies, shedding light on sustainability within academic discourse. Secondly, by examining policy discourse within EITI's multi-stakeholder forum, the study assesses policymakers' recognition and response to industry impacts, revealing sustainability dimensions in policy deliberations. Thirdly, employing the social-ecological peace framework, the analysis explores discourses influencing institutional structures, complementing the new institutional approach. Lastly, by evaluating governance quality through transparency, participation, and accountability, the study gauges EITI's impact on sustainability. Findings indicate a partial interpretation of sustainability, with economic aspects overshadowing others in the resource curse debate, while institutional issues dominate causal mechanisms. Despite a decade of implementation, EITI-Indonesia has not significantly improved governance quality or fostered sustainability due to limited adherence to broader governance reforms. The standard's minimal scope constrains its ability to promote integrative sustainability dimensions. Implications suggest the need for policymakers to transcend mere compliance and commit to comprehensive governance reforms, bolstering transparency, participation, and accountability. Strengthening governance practices, enhancing socio-ecological reflexivity, and promoting multi-stakeholder dialogues are deemed crucial for sustainable development in Indonesia's extractive sector. Policymakers should utilize EITI as a catalyst for broader governance reforms, encompassing all dimensions of sustainability and fostering socio-ecological reflexivity. This thesis offers insights into the transformative potential of global standards in fostering sustainability, particularly in emerging economies. Additionally, it provides theoretical frameworks for analyzing discourses, social-ecological contexts, and the performance of global sustainability standards, facilitating informed policy interventions.