Does the Extractive Industries Transparency Initiative (EITI) help reduce corruption in Latin America? Evidence from Colombia, Guatemala, Honduras, Peru, and Trinidad and Tobago

Vast revenues coming from mineral resources encourage rent-seeking activities that ham-per institutions and development. This phenomenon is captured in the ‘resource curse’ theory, meaning that mineral-rich countries perform worse in economic growth. Thus, the Extractive Industries Transparency Initiative (EITI), launched in 2002, was presented as an alternative to counter corruption through the disclosure of information and the involvement of different stakeholders in the extractive sector. Since then, the number of new EITI members increased progressively, as well as the studies to assess the initiative’s validity. There are several evaluations performed on the whole sample of EITI countries and few on individual case studies. However, there remains scarce evidence of analyses on individual cases within the same region. In this regard, this study uses a Synthetic Control Methodology (SCM) to measure the EITI’s impact on corruption in five Latin American countries: Colombia, Guatemala, Honduras, Peru, and Trinidad and Tobago. The method allows for seeing the EITI’s effect in each stage of its implementation. The results of this research are mixed. In most cases, there is not a decrease in corruption. Instead, there is a marginal increase in corruption. Several reasons could explain these findings, such as political scandals of corruption, civil conflicts, or weak involvement of the civil society. Hence, the latter explanations would suggest that the EITI in Latin America has been unsuccessful. This evidence improves our comprehension of the evolution of corruption in developing countries afte

The Extractive Industries Transparency Initiative (EITI) and corruption in Latin America

The Extractive Industries Transparency Initiative (EITI), launched in 2002, has been promoted as an international anti-corruption tool. Several empirical evaluations on the effectiveness of the EITI scheme provide average estimates based on cross-country analysis. However, little empirical work has been conducted on individual case studies, especially in the context of Latin America. Our study uses a Synthetic Control Methodology (SCM) to measure the EITI’s impact on several measures of corruption in the first five Latin American countries to join the initiative: Colombia, Guatemala, Honduras, Peru, and Trinidad and Tobago. The method allows us to assess the magnitude and statistical significance of the EITI’s effect on perceived corruption at each stage of implementation. Our results cast doubt on how decisive the scheme has been in combatting corruption. In the vast majority of cases, participation in the scheme either had no statistically significant effect or even coincided with marginally increased corruption levels (only in very few cases it was associated with temporary minor improvements). Taken together, the results indicate that joining EITI did not lead to a substantial decrease of corruption in any of the countries under scrutiny