- The need for developing countries to increase their domestic revenue is more urgent after the COVID-19 pandemic, which severely weakened public finances. This brief examines recent research showing that the implementation of the Extractive Industries Transparency Initiative (EITI) improves governments’ ability to raise natural resource revenue.
- By analyzing data from 83 Global South countries over the period 1995?2019, our study shows that implementing EITI in member countries increases resource revenue. It does this through improved governance resulting from thegreater transparency and increased foreign direct investment and exports in the extractive resource sector. The study highlights the sizeable contribution of EITI implementation to domestic revenue mobilization and the necessity to improve transparency in natural resources management, especially as international demand for critical mineral resources is expected to grow strongly.
[Findings]
- National-level implementation of the Extractive Industries Transparency Initiative (EITI)―an accounting transparency standard for companies in oil, gas, and mining―raises the ratio of resource revenues in GDP by 1.7 percentage points
- The benefits of EITI implementation are higher for resource-rich countries, due to their greater dependence on the extractive sector
- These gains come through better governance and transparency in resource management, greater foreign direct investment, and higher exports of natural resources