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

95 Pages Posted: 19 Oct 2020 Last revised: 1 Apr 2022

See all articles by Hans Christensen

Hans 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: March 30, 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 US Foreign Corrupt Practices Act (FCPA) enforcement, nighttime luminosity increases by 15% (5%) in communities within a 10-(25-) kilometer radius of affected extraction facilities. Cash-wage employment increases by 22%, 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 and that the pass-through from global commodity prices to luminosity increases following the rise in FCPA enforcement.

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 the Local Economic Benefits of Resource Extraction (March 30, 2022). 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 Miami - Department of Accounting ( email )

Coral Gables, FL 33146-6531
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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