Transparency & Corruption
What is the Issue?
Transparency is perhaps the most important vehicle for ensuring that revenues from resources are used for development; government transparency reduces the potential for corruption, authoritarianism, and ineffective governance. Similarly, it is critical for companies who are participating in the generation of national wealth to have strong governance standards, processes, and controls. While companies cannot control how governments spend their proceeds from resource development projects, they can promote high ethical standards by acting in accordance with such standards.
What are the Challenges?
Academic research is divided on the impact that natural resources have on an economy, but there is a growing consensus that when there is a "curse", it is likely because of governance issues. Some experts believe that in nations rich with energy resources, corruption and a lack of accountability can mean that policies and funding needed to address poverty and human development are not always adequately implemented.
What are the Solutions?
Initiatives such as the Extractives Industry Transparency Initiative (EITI) are working to improve governments’ transparency about revenues from oil, gas and mining. By increasing the financial information available to citizens and civil society, such efforts seek to make governments more accountable for using resource revenues in a way that contributes to sustainable development and poverty reduction. A range of efforts are addressing what the World Bank has identified as the necessary conditions for extractives industries to contribute to poverty alleviation and community benefits: transparent and effective governance, effective social and environmental policies, and respect for human rights.