Is sunshine the best disinfectant? Evaluating the global effectiveness of the Extractive Industries Transparency Initiative (EITI)

Abstract

Corruption and sustainability remain central themes in the study of energy and climate governance as well as energy transitions. Almost half of the human population globally (3.5 billion people) resides in countries with large endowments of fossil fuels or minerals, yet many governments and companies operating in these countries do not release timely, full, open, transparent data about the extraction of those resources or the revenues produced. Many academic theorists have suggested that transparency—“timely and reliable economic, social and political information accessible to all relevant stakeholders” —can partially counteract some of the governance challenges facing the energy sector and improve social welfare. The Extractive Industries Transparency Initiative (EITI) operates on the principle of having accountable and transparent assessments of the ways that extractive industries companies interact with governments and moderate their social and economic impacts. As of early 2020, its revenue transparency standards were being implemented in 52 countries, and it included almost $2.5 trillion in government revenues from oil, gas, and mining spread across more than 300 years of report coverage. Does the transparency promulgated by the EITI produce better governance and development outcomes in EITI compliant countries? Does it accelerate or retard a transition to lower-carbon forms of energy? Using a unique dataset of 218 countries, the paper quantitatively assesses the correlative performance of the first 12 countries to attain EITI compliant status on a series of metrics over the period 2000 to 2020 compared to all non-EITI countries. These 12 EITI Compliant Countries reported 57 separate revenue streams covering oil, gas, and minerals; involved 652 companies; and were responsible for $169 billion in government revenue when they joined the EITI, meaning they represented a sizable chunk of EITI assets at that time.