The EITI in "Petro-states"

The Resource Investor, a web news service for investors in the mining, drilling, and piping sectors, recently published an article by Susan A. Aaronson on the effects of the EITI (Extractive Industries Transparency Initiative) in resource-rich developing countries. The article, entitled "Can Transparency in the Extractive Industries Break the Resource Curse?," compares data on business regulation and government accountability in EITI implementing and non-EITI participating countries over the four years since the agreement's founding in 2004. Her analysis suggests that the EITI has positively affected transparency indicators.

Aaronson makes the case that these indicators are important precursors to the extension of extractive revenues beyond government elites to local populations, a historical challenge for many resource-rich countries. She holds that the EITI may have ripple affects in non-extractive sectors, and that this could greatly amplify the power of the initiative to solve long-standing economic development problems.

Aaronson argues the benefits of the EITI convincingly, but an important concern about sampling bias remains. The EITI is a voluntary program. EITI-participating nations may be different from their non-signatory peers in important ways. Participatory countries choose to join the EITI for one reason or another. One could be a spontaneous increase in representative democracy. Another could be external pressure from a mining corporation. Either of these forces would predispose a government to increase transparency.

Is the true cause the EITI, or is it the pre-existing conditions that prompt a country to adopt the EITI? We look forward to hearing your thoughts on this and other aspects of Aaronson's discussion of this important sustainability issue.