The effects of increased revenue transparency in the extractives sector: The case of the Extractive Industries Transparency Initiative

Corrigan, Caitlin C.

doi:10.1016/j.exis.2017.03.004

Cited by 25 publications

(11 citation statements)

References 38 publications

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“…In contrast to their study, we focus on natural resource rents rather than oil prices. Natural resource rents have been previously used to explain economic development by, for example, Corrigan (2017). Further studies include Tsui (2011), who estimates the effects of oil discoveries (as well as oil endowment) on democracy for a panel of countries and Masi and Ricciuti (2019), who find that exogenous variation in 1 Our dataset suggests considerable evolution towards more democratic regimes over this 35-year time span, although at varying degrees depending on region.…”

Section: Introductionmentioning

confidence: 94%

Democracy in emerging markets: A new perspective on the natural resources curse

Mollick

Vianna

Hazarika

2020

The Extractive Industries and Society

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Using annual data from 1980 to 2014, we reexamine the relationship between democracy and natural resources for a large sample of emerging market economies. Controlling for human capital (or real GDP per capita) and openness measures, dynamic panel methods address endogeneity from more democratic regimes demanding better control of rents. We find that democracy responds positively to natural resource rents in GDP (NAT) and negatively to terms of trade (TOT). The NAT positive effects mitigate the negative impact of TOT on democracy and holds well in different specifications. By building on a literature focusing on oil rents, increases in NAT (extra revenue over production costs) represent a windfall for mining companies. This leads society to require higher levels of participation in decisions to exploit these rents more transparently. We also find that diversification of rents helps democracy, especially in economies with high shares of oil rents.

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Section: Introductionmentioning

confidence: 94%

Democracy in emerging markets: A new perspective on the natural resources curse

Mollick

Vianna

Hazarika

2020

The Extractive Industries and Society

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“…Van Alstine (2017) reports that EITI member states do not perform better in corruption rankings than nonmember states. Corrigan (2017) finds that the EITI has had positive effects but that these effects have not resulted in significant improvements in control of corruption. On the other hand, Papyrakis et al (2017) find that mineral-rich countries tend to experience an increase in corruption, but that this effect is offset by commitment to the EITI, with EITI member countries experiencing a slight improvement in transparency.…”

Section: Eiti and Other Transparency Schemesmentioning

confidence: 99%

Transparency in extractive industry commodities trading

Östensson¹

2020

WIDER Working Paper

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The paper reviews the debate about transparency in extractive industry commodities trade. It examines the obstacles to improved transparency. A critical review of the experience with estimating losses from a lack of transparency concludes that many of the published estimates of losses from transfer mispricing and misinvoicing suffer from methodological deficiencies and appear to be exaggerations. The role of finance in extractive commodities trade is briefly discussed and it is noted that lending to companies owned by the state may affect the government’s standing with donors and investors. The most important transparency and responsible sourcing initiatives are reviewed. The initiatives appear to have had some positive effect on public financial management, investment climate, and economic growth. The experience of government-initiated responsible sourcing, including for conflict minerals, concludes that initiatives must include all or almost all market participants and that the cost of due diligence be equitably shared. Finally, a number of recommendations are made.

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“…To attempt to establish causality, this study draws upon previous studies on EITI for its methodological approach. Several studies have used panel data regression analysis (Öge, 2016b;Corrigan, 2017) with treatment effects (Kasekende et al, 2016) to control for the fact that the decision to join EITI may not be exogenous. As observed in Kasekende et al (2016), countries that chose to join EITI are likely a self-selected group, which would imply our sample is systematically skewed by resource-rich developing countries that have some unobserved characteristic that pushes them to join EITI, whereas other resource-rich developing countries may not.…”

Section: Panel Regressionsmentioning

confidence: 99%

“…Finally, some studies have examined the direct link between EITI membership and macroeconomic outcomes. There is evidence that EITI implementation acts as a credible signalling mechanism for a government's credibility and can therefore attract investment (David-Barrett and Okamura, 2013; Schmaljohann, 2013; Malden, 2017) or have a positive impact on economic development (Corrigan, 2017). Alternatively, some evidence shows that EITI implementation may distort economic incentives (Sturesson and Zobel, 2015), or that its success at attracting investment may be due to the fact that countries more dependent on FDI are more likely to join (Öge, 2016a).…”

Section: Literature Reviewmentioning

confidence: 99%

Worth its weight in gold: is the extractive industries transparency initiative a credible signalling mechanism to investors?

Fraser

2021

Envir. Dev. Econ.

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This paper seeks to understand the link between resource governance and investor expectations in resource-rich countries. We test whether voluntary membership in the Extractive Industries Transparency Initiative (EITI), a public-private partnership that promotes transparency and accountability in the extractives sector, behaves as a credible signalling mechanism to investors that governments in resource-rich countries can manage resource revenue and adhere to sustainable fiscal policies in the medium and long run. Using an interrupted time series analysis coupled with a fixed effects model, we examine whether investor expectations on the price of sovereign debt behave as a credible signalling mechanism in the presence of certain conditions. Results indicate that in some cases there is a significant change in spread on the default price of sovereign debt as a result of announcement of either EITI candidacy or EITI compliance. However, it is clear that EITI membership alone is not a sufficient signal to investors that a country can effectively manage its resource revenues in the long run because the result of EITI implementation is heavily influenced by country-specific conditions.

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The effects of increased revenue transparency in the extractives sector: The case of the Extractive Industries Transparency Initiative

Cited by 25 publications

References 38 publications

Democracy in emerging markets: A new perspective on the natural resources curse

Democracy in emerging markets: A new perspective on the natural resources curse

Transparency in extractive industry commodities trading

Worth its weight in gold: is the extractive industries transparency initiative a credible signalling mechanism to investors?

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