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Corruption, Underdevelopment, and Extractive Resource Industries: Addressing the Vicious Cycle

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  • O’Higgins, Eleanor R. E.

Abstract

The systemic role of corruption and its link to low human development is explored. The extractive resource industry is presented as an arena where conditions for corruption—monopoly and discretion without accountability—are especially intense. Corruption is maintained by a self-reinforcing cycle. Multiple stakeholders are involved in the maintenance of and/or opposition to the cycle: investing corporations, host country regimes and officials, inter-governmental bodies like the OECD, industry associations, non-governmental organization (NGO) watchdogs like Transparency International, and international agencies facilitating global investment like the World Bank. Complementarity of interests between the demand and supply sides provides strong incentives for entrenched players to maintain corruptive relationships, to protect past gains and sustain current ones. Compulsory international regulation, maximum transparency, effective detection, and enforcement are recommended to enhance accountability, thereby reversing the cycle. It is also necessary to create a corporate culture built on integrity, if regulation itself is to succeed.

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  • O’Higgins, Eleanor R. E., 2006. "Corruption, Underdevelopment, and Extractive Resource Industries: Addressing the Vicious Cycle," Business Ethics Quarterly, Cambridge University Press, vol. 16(2), pages 235-254, April.
    • Handle: RePEc:cup:buetqu:v:16:y:2006:i:02:p:235-254_01
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    Cited by:

    1. Onyeka Osuji, 2011. "Fluidity of Regulation-CSR Nexus: The Multinational Corporate Corruption Example," Journal of Business Ethics, Springer, vol. 103(1), pages 31-57, September.
    2. Teichmann, Fabian & Falker, Marie-Christin & Sergi, Bruno S., 2020. "Extractive industries, corruption and potential solutions. The case of Ukraine," Resources Policy, Elsevier, vol. 69(C).
    3. Christopher Hajzler & Jonathan Rosborough, 2016. "Government Corruption and Foreign Direct Investment Under the Threat of Expropriation," Staff Working Papers 16-13, Bank of Canada.
    4. Bertrand Venard & Kezang Tshering, 2021. "Barriers to transparency in Bhutan's public administration: A new typology of opacity," Public Administration & Development, Blackwell Publishing, vol. 41(4), pages 203-216, October.
    5. Robson Fernandes Soares & Edson Ronaldo Guarido Filho, 2021. "Anti-Corruption Enforcement and Organizations: A Narrative Review," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 25(6), pages 190149-1901.
    6. Professor Bahaudin G. Mujtaba, 2012. "Bribery Challenges And Business Ethics In Afghanistan," Far East Journal of Psychology and Business, Far East Research Centre, vol. 6(4), pages 58-76, February.
    7. Professor Hafiz Abdur Rashid & Hafsa Noreen & Monazza Karamat, 2012. "Growth And Prospects Of Islamic Banking In Pakistan," Far East Journal of Psychology and Business, Far East Research Centre, vol. 7(4), pages 52-65, May.
    8. Mukhiddin Jumaev & Prof. Dr. Dileep Kumar. M. & Jalal R. M. Hanaysha, 2012. "Impact Of Relationship Marketing On Customer Loyalty In The Banking Sector," Far East Journal of Psychology and Business, Far East Research Centre, vol. 6(4), pages 36-55, March.
    9. Ufere, Nnaoke & Gaskin, James & Perelli, Sheri & Somers, Antoinette & Boland, Richard, 2020. "Why is bribery pervasive among firms in sub-Saharan African countries? Multi-industry empirical evidence of organizational isomorphism," Journal of Business Research, Elsevier, vol. 108(C), pages 92-104.
    10. Pierre-Xavier Meschi, 2009. "Government corruption and foreign stakes in international joint ventures in emerging economies," Asia Pacific Journal of Management, Springer, vol. 26(2), pages 241-261, June.
    11. David B. Audretsch & Maksim Belitski & Farzana Chowdhury & Sameeksha Desai, 2022. "Necessity or opportunity? Government size, tax policy, corruption, and implications for entrepreneurship," Small Business Economics, Springer, vol. 58(4), pages 2025-2042, April.
    12. Gupta, Kartick, 2017. "Are oil and gas firms more likely to engage in unethical practices than other firms?," Energy Policy, Elsevier, vol. 100(C), pages 101-112.
    13. Carol M. Sánchez & Kevin Lehnert., 2018. "Firm-level trust in emerging markets: the moderating effect on the institutional strength- corruption relationship in Mexico and Peru," Estudios Gerenciales, Universidad Icesi, vol. 34(147), pages 127-138, May.
    14. Avdasheva, Svetlana & Kryuchkova, Polina, 2015. "The ‘reactive’ model of antitrust enforcement: When private interests dictate enforcement actions – The Russian case," International Review of Law and Economics, Elsevier, vol. 43(C), pages 200-208.

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