Transparency and natural resources in sub-Saharan Africa

The resource curse has drawn much attention from economists and policymakers. An effort to resolve this curse is the Extractive Industries Transparency Initiative (EITI), a global standard to improve transparency and accountability in resource-abundant countries. This study theoretically and empirically assesses the impact of EITI on natural resource rents. We present a simple model to describe the collusion between politicians and resource companies. Our model reveals that monitoring both politicians and resource companies under schemes such as EITI is effective in preventing illegal transactions. Then, using data for sub-Saharan African countries from 1991 to 2015, we show that EITI implementation increases total natural resource rents and mineral rents, although it has no significant impact on oil and natural gas rents.

Automated summary

The resource curse has garnered attention from economists and policymakers, and the Extractive Industries Transparency Initiative (EITI) has been proposed as a solution to improve transparency and accountability in resource-rich countries. This study examines the impact of EITI on natural resource rents, and finds that monitoring both politicians and resource companies under EITI can effectively prevent illegal transactions. Using data from sub-Saharan African countries, the study shows that EITI implementation increases total natural resource rents and mineral rents, but has no significant impact on oil and natural gas rents.