The effects of increased revenue transparency in the extractives sector: The case of the Extractive Industries Transparency Initiative

It has been argued that transparency can play an important role in allowing governments and citizens to benefit from their natural resource wealth. The Extractive Industries Transparency Initiative (EITI) was established in 2002 to promote transparency in the revenues collected by governments from the extractive industries, bringing industry, government and civil society stakeholders into the monitoring process. This study assesses the impact of EITI membership on two factors argued to be affected by resource wealth, economic development and corruption. Using panel data from 1997/98 to 2014, the study estimates a fixed effects model to evaluate the impact of joining the EITI on changes in economic and corruption indicators overtime and compared to non-members, conditional on a country's level of resource dependence. The study finds that the EITI has had a significant and positive effect on economic development in member states since its inception, but these effects have not yet been translated to observable and significant improvements in control of corruption. The economic benefits of revenue transparency have important implications for resource producing governments who are considering joining the EITI and for resource importing governments that are currently considering increased regulation concerning revenue transparency in the extractive industries.