Does transparency pay ? The impact of EITI on tax revenues in resource-rich developing countries

This paper assesses the "treatment effect" of Extractive Industries Transparency Initiative (EITI) membership on domestic tax revenues mobilization (DRM) in resource-rich developing countries through two main channels. The first consists of a fair tax system, and the second of spillover effects of productive expenditures favored by EITI. With 83 resource-rich developing countries (DCs) (46 EITI and 37 non-EITI) from 2001 to 2017, we use propensity score matching (PSM) to address the self-selection bias associated with EITI membership. The paper reveals that EITI-members have higher DRM than non-members and that DRM is higher when countries are compliant, even higher with quality of governance, and heterogeneous due to some structural factors. EITI commitment or candidacy impacts DRM significantly and positively compared to non-EITI (1.06 to 1.20 percentage points). EITI compliance generates a considerable surplus of DRM (1.09 to 1.13 percentage points) compared to non-compliant. Besides, the magnitudes of the impacts are more significant if we include governance indicators. The results are robust to non-resource tax (NRTAX) revenues and income tax.