Self-Regulation in Weak Institutional Environments: The Extractive Industries Transparency Initiative, Corruption, and Growth in Resource-Rich African Communities

Abstract

Can voluntary self-regulatory institutions address corruption in weak institutional environments? Prevailing wisdom suggests that absent rigorous enforcement, such initiatives may merely generate symbolic gestures. We revisit this conclusion by examining the Extractive Industries Transparency Initiative (EITI)—a multi-stakeholder effort designed to deter corruption in resource-rich countries. Linking annual firm-level EITI membership with Afrobarometer survey data and satellite-based measures of local economic activity, we find lower perceptions of corruption, greater civic engagement, and increased economic development near the oil and gas operations of firms after they become EITI members. We argue that, in these weak institutional environments, external pressure from civil society and global NGOs can partly substitute for formal legal enforcement, inducing genuine adherence to self-imposed transparency standards, which in turn, meaningfully improve governance and development outcomes.

Keywords: Extractive industries, Transparency, Voluntary Disclosure, Corruption, Africa, Self-regulation, Mutli-stakeholder initiative