The Transparency Paradox: Why Corrupt Countries Join the Extractive Industries Transparency Initiative

28 Pages Posted: 5 Aug 2013

See all articles by Elizabeth Dávid-Barrett

Elizabeth Dávid-Barrett

Said Business School; University of Sussex

Ken Okamura

University of Oxford - Said Business School

Date Written: 2013

Abstract

Rules that require actors to make their finances more transparent have become a key part of the anti-corruption toolkit, under the assumption that sunlight is the best disinfectant. This logic underpinned the creation, in 2002, of the Extractive Industries Transparency Initiative (EITI), an international club aimed at reducing corruption in oil, gas and mining by requiring countries to make revenues transparent. The initiative has proved extremely popular, with 16 countries now rated as EITI compliant, 23 having attained candidate status and many others having signaled their intent to implement EITI. However, the EITI is a soft law standard to which countries voluntarily commit. It therefore presents a paradox: why would corrupt governments voluntarily expose themselves to sunlight and thereby forego future corrupt revenues? Does its popularity imply that the initiative is meaningless and does not achieve its aim of reducing corruption? We argue that donors use the EITI standard in combination with the promise of aid to exert ‘productive power’ (Barnett and Duvall 2005) over resource-rich developing countries and persuade them to build institutions which help fight corruption.

We employ mixed methods. Our quantitative analysis confirms that countries gain access to benefits in terms of increased aid the further they progress through the EITI implementation process. However, we also find that EITI achieves real results in terms of reducing corruption, as measured by the Transparency International Corruption Perceptions Index. We support this latter finding through a theoretical discussion of the mechanism by which EITI might reduce corruption, and qualitative analysis of the EITI implementation process in several countries. We suggest that EITI is effective in reducing corruption because it leads to the building of multi-stakeholder institutions which improve accountability. EITI therefore provides an interesting model for global governance in other areas.

Keywords: corruption, natural resources, international organizations, global governance, reputation, aid, conditionality

Suggested Citation

David-Barrett, Elizabeth and Okamura, Ken, The Transparency Paradox: Why Corrupt Countries Join the Extractive Industries Transparency Initiative (2013). APSA 2013 Annual Meeting Paper; American Political Science Association 2013 Annual Meeting. Available at SSRN: https://ssrn.com/abstract=2299731

Elizabeth David-Barrett (Contact Author)

Said Business School ( email )

Park End Street
Oxford, OX1 1HP
United Kingdom

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

Ken Okamura

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
44-1865614825 (Phone)

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