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 hamper 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 after an
intervention of this nature.