Reversing the Resource Curse: Foreign Corruption Regulation and Economic Development

71 Pages Posted: 19 Oct 2020 Last revised: 22 Dec 2020

See all articles by Hans Christensen

Hans Christensen

University of Chicago - Booth School of Business

Mark G. Maffett

University of Chicago - Booth School of Business

Thomas Rauter

University of Chicago - Booth School of Business

Date Written: December 21, 2020

Abstract

We examine whether foreign corruption regulation reduces corruption and increases the local economic benefits of resource extraction. After a mid-2000s increase in enforcement of the US Foreign Corrupt Practices Act (FCPA), economic activity (measured by nighttime luminosity) increases by 14% (3%) in African communities within a 10- (25-) kilometer radius of resource extraction facilities whose owners are subject to the FCPA. Local perceptions of corruption decline by 8%. Consistent with changes in existing extraction firms’ business practices contributing to the increase in development, the association between resource production, instrumented by world commodity prices, and local economic activity increases by 40%.

Keywords: Foreign Corruption Regulation; Foreign Corrupt Practices Act (FCPA); Economic Development; Natural Resource Extraction

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

Suggested Citation

Christensen, Hans and Maffett, Mark G. and Rauter, Thomas, Reversing the Resource Curse: Foreign Corruption Regulation and Economic Development (December 21, 2020). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-155, Available at SSRN: https://ssrn.com/abstract=3714027 or http://dx.doi.org/10.2139/ssrn.3714027

Hans Christensen

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Mark G. Maffett

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Thomas Rauter (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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