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Energy Governance, Transnational Rules, and the Resource Curse: Exploring the Effectiveness of the Extractive Industries Transparency Initiative (EITI)

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  • Sovacool, Benjamin K.
  • Walter, Götz
  • Van de Graaf, Thijs
  • Andrews, Nathan

Abstract

Transnational standards for disclosure have become a defining feature of global governance and sound economic development, yet little is known about their effectiveness. This study statistically explores the efficacy of such standards for the important case of the Extractive Industries Transparency Initiative (EITI), an international non-governmental organization which maintains a voluntary standard for revenue transparency in the extractive industries. As of November 2015, 31 countries were “EITI Compliant” and another 49 were “EITI Candidates.” In total, 49 countries had disclosed payments and revenues worth some $1.67 trillion in more than 200 “EITI Reports”, and over 90 major companies involved in oil, gas, and mining are committed to supporting the EITI. The EITI has also received support from 84 global investment institutions that collectively manage about $16 trillion in energy infrastructural assets. Moreover, the European Union, African Union, G8 and G20, and the United Nations have all endorsed the EITI. This article provides the first broad empirical examination of the EITI’s effectiveness in improving governance and economic development outcomes in its member countries using non-parametric tests, regression analysis, and data from the World Bank. We analyze the performance of the first 16 countries to attain EITI Compliance Status over the period of 1996–2014. We find, interestingly, that in most metrics EITI countries do not perform better during EITI compliance than before it, and that they do not outperform other countries. We postulate four possible explanations behind the relative weakness of the EITI: a limited mandate, its voluntary nature, stakeholder resistance, and dependence on strong civil society.

Suggested Citation

  • Sovacool, Benjamin K. & Walter, Götz & Van de Graaf, Thijs & Andrews, Nathan, 2016. "Energy Governance, Transnational Rules, and the Resource Curse: Exploring the Effectiveness of the Extractive Industries Transparency Initiative (EITI)," World Development, Elsevier, vol. 83(C), pages 179-192.
  • Handle: RePEc:eee:wdevel:v:83:y:2016:i:c:p:179-192
    DOI: 10.1016/j.worlddev.2016.01.021
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    References listed on IDEAS

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    Cited by:

    1. Zaman, Rafia & Brudermann, Thomas, 2018. "Energy governance in the context of energy service security: A qualitative assessment of the electricity system in Bangladesh," Applied Energy, Elsevier, vol. 223(C), pages 443-456.
    2. Rustad, Siri Aas & Le Billon, Philippe & Lujala, Päivi, 2017. "Has the Extractive Industries Transparency Initiative been a success? Identifying and evaluating EITI goals," Resources Policy, Elsevier, vol. 51(C), pages 151-162.
    3. Muhanji, Stella & Ojah, Kalu & Soumaré, Issouf, 2019. "How do natural resource endowment and institutional quality influence the nexus between external indebtedness and welfare in Africa?," Economic Systems, Elsevier, vol. 43(1), pages 77-98.
    4. Mawejje, Joseph, 2019. "Natural resources governance and tax revenue mobilization in sub saharan Africa: The role of EITI," Resources Policy, Elsevier, vol. 62(C), pages 176-183.
    5. Poncian, Japhace & Jose, Jim, 2019. "Resource governance and community participation: Making hydrocarbon extraction work for Tanzania," Resources Policy, Elsevier, vol. 62(C), pages 84-93.
    6. Mertzanis, Charilaos, 2018. "Institutions, development and energy constraints," Energy, Elsevier, vol. 142(C), pages 962-982.
    7. Mohaddes, M. & Nugent, J. & Selim, H., 2018. "Reforming Fiscal Institutions in Resource-Rich Arab Economies: Policy Proposals," Cambridge Working Papers in Economics 1848, Faculty of Economics, University of Cambridge.
    8. Lujala, Päivi, 2018. "An analysis of the Extractive Industry Transparency Initiative implementation process," World Development, Elsevier, vol. 107(C), pages 358-381.
    9. Vijge, Marjanneke J. & Metcalfe, Robin & Wallbott, Linda & Oberlack, Christoph, 2019. "Transforming institutional quality in resource curse contexts: The Extractive Industries Transparency Initiative in Myanmar," Resources Policy, Elsevier, vol. 61(C), pages 200-209.
    10. Ejiogu, Amanze & Ejiogu, Chibuzo & Ambituuni, Ambisisi, 2019. "The dark side of transparency: Does the Nigeria extractive industries transparency initiative help or hinder accountability and corruption control?," The British Accounting Review, Elsevier, vol. 51(5).
    11. Anthony Bebbington & Elisa Arond & Juan Luis Dammert, 2016. "Scalar politics and transnational governance innovations: A political settlements lens on the Extractive Industries Transparency Initiative in the Andes," Global Development Institute Working Paper Series esid-066-16, GDI, The University of Manchester.
    12. Adams, Dawda & Ullah, Subhan & Akhtar, Pervaiz & Adams, Kweku & Saidi, Samir, 2019. "The role of country-level institutional factors in escaping the natural resource curse: Insights from Ghana," Resources Policy, Elsevier, vol. 61(C), pages 433-440.
    13. Hanaček, Ksenija & Roy, Brototi & Avila, Sofia & Kallis, Giorgos, 2020. "Ecological economics and degrowth: Proposing a future research agenda from the margins," Ecological Economics, Elsevier, vol. 169(C).
    14. Keith Slack, 2017. "Capturing economic and social benefits at the community level: Opportunities and obstacles for civil society," WIDER Working Paper Series 051, World Institute for Development Economic Research (UNU-WIDER).
    15. Lawer, Eric Tamatey & Lukas, Martin C. & Jørgensen, Stig H., 2017. "The neglected role of local institutions in the ‘resource curse’ debate. Limestone mining in the Krobo region of Ghana," Resources Policy, Elsevier, vol. 54(C), pages 43-52.
    16. Keith Slack, 2017. "Capturing economic and social benefits at the community level: Opportunities and obstacles for civil society," WIDER Working Paper Series wp-2017-51, World Institute for Development Economic Research (UNU-WIDER).

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