Is Transparency the Key to Reducing Corruption in Resource-Rich Countries?

This article was written by Ivar Kolstad and Arne Wiig, and published in World Development Volume 37, Issue 3, March 2009, Pages 521-532.

Transparency is increasingly viewed as central to curbing corruption and other dysfunctions of resource-rich developing countries. The international development community has pushed transparency in resource revenues through such initiatives as the Extractive Industries Transparency Initiative (EITI). Despite the popularity of the transparency concept, its role in reducing corruption and averting the resource curse is poorly understood. This paper reviews the main mechanisms through which transparency can reduce corruption. It argues that transparency is insufficient in itself, and needs to be complemented by other types of policies. Transparency reform should focus on the areas most important to alleviating the resource curse. In view of the resource curse literature, the emphasis of the EITI on revenues rather than on expenditures appears misplaced.