Reversing the Resource Curse: Foreign Corruption Regulation and the Local Economic Benefits of Resource Extraction

100 Pages Posted: 2 Dec 2020 Last revised: 18 Oct 2022

See all articles by Hans Bonde Christensen

Hans Bonde Christensen

University of Chicago - Booth School of Business

Mark G. Maffett

University of Miami - Department of Accounting

Thomas Rauter

University of Chicago - Booth School of Business

Date Written: October 17, 2022

Abstract

We examine how foreign corruption regulation affects the economic benefits communities receive from extraction activities in resource-rich areas of Africa. After a mid-2000s increase in enforcement of the US Foreign Corrupt Practices Act (FCPA), nighttime luminosity increases by 15% (5%) in communities within a 10-(25-) kilometer radius of affected extraction facilities. Cash-wage employment also increases significantly, suggesting that the economic benefits are not limited to electricity access. Consistent with foreign corruption regulation mitigating the political resource curse, we find that perceived corruption decreases following the rise in FCPA enforcement.

Keywords: Foreign Corruption Regulation; Foreign Corrupt Practices Act (FCPA); Natural Resource Extraction; Nighttime Luminosity; Governance

JEL Classification: F50; F60; K2; M4; O1

Suggested Citation

Christensen, Hans Bonde and Maffett, Mark G. and Rauter, Thomas, Reversing the Resource Curse: Foreign Corruption Regulation and the Local Economic Benefits of Resource Extraction (October 17, 2022). Available at SSRN: https://ssrn.com/abstract=3712693 or http://dx.doi.org/10.2139/ssrn.3712693

Hans Bonde Christensen

University of Chicago - Booth School of Business ( email )

5807 South Woodlawn Avenue
Chicago, IL 60637
United States

Mark G. Maffett (Contact Author)

University of Miami - Department of Accounting ( email )

Coral Gables, FL 33146-6531
United States

Thomas Rauter

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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