Does the Extractive Industries Transparency Initiative (EITI) help reduce corruption in Latin America? Evidence from Colombia, Guatemala, Honduras, Peru, and Trinidad and Tobago

Ibeth Margarita López Cazar

ISS Working Papers - General Series from International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague

Abstract: Vast revenues coming from mineral resources encourage rent-seeking activities that ham-per institutions and development. This phenomenon is captured in the ‘resource curse’ theory, meaning that mineral-rich countries perform worse in economic growth. Thus, the Extractive Industries Transparency Initiative (EITI), launched in 2002, was presented as an alternative to counter corruption through the disclosure of information and the involvement of different stakeholders in the extractive sector. Since then, the number of new EITI members increased progressively, as well as the studies to assess the initiative’s validity. There are several evaluations performed on the whole sample of EITI countries and few on individual case studies. However, there remains scarce evidence of analyses on individual cases within the same region. In this regard, this study uses a Synthetic Control Methodology (SCM) to measure the EITI’s impact on corruption in five Latin American countries: Colombia, Guatemala, Honduras, Peru, and Trinidad and Tobago. The method allows for seeing the EITI’s effect in each stage of its implementation. The results of this research are mixed. In most cases, there is not a decrease in corruption. Instead, there is a marginal increase in corruption. Several reasons could explain these findings, such as political scandals of corruption, civil conflicts, or weak involvement of the civil society. Hence, the latter explanations would suggest that the EITI in Latin America has been unsuccessful. This evidence improves our comprehension of the evolution of corruption in developing countries after an intervention of this nature.

Keywords: Extractive Industries Transparency Initiative; EITI; corruption; transparency; governance; resource curse; Synthetic Control Methodology (search for similar items in EconPapers)
Pages: 79
Date: 2020-01-27
New Economics Papers: this item is included in nep-dev
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Persistent link: https://EconPapers.repec.org/RePEc:ems:euriss:123971

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