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

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  • Hans B. Christensen
  • Mark Maffett
  • Thomas Rauter

Abstract

We examine how foreign corruption regulation affects the economic benefits communities receive from extraction activities in the 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 percent (5 percent) in communities within a 10-kilometer (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.

Suggested Citation

  • Hans B. Christensen & Mark Maffett & Thomas Rauter, 2024. "Reversing the Resource Curse: Foreign Corruption Regulation and the Local Economic Benefits of Resource Extraction," American Economic Journal: Applied Economics, American Economic Association, vol. 16(1), pages 90-120, January.
    • Handle: RePEc:aea:aejapp:v:16:y:2024:i:1:p:90-120
    DOI: 10.1257/app.20210408
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    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices

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