Why do Corrupt Countries Join EITI?

ERCAS WP: Rules that require actors to make their finances transparent have become a key part of the anti-corruption toolkit, under the assumption that sunlight is the best disinfectant. This logic underpinned the creation, in 2002, of the Extractive Industries Transparency Initiative (EITI), an international club aimed at reducing corruption in oil, gas and mining. The initiative has proved popular, with 16 countries now EITI compliant and 23 others having achieved candidate status. However, as a soft law standard to which countries voluntarily commit, EITI presents a paradox: why would corrupt governments voluntarily expose themselves to sunlight? Does its popularity imply that it is meaningless? We argue that governments join because they are concerned about their reputation with international donors and expect to be rewarded by increased aid. Our quantitative analysis demonstrates that countries do gain access to increased aid the further they progress through the EITI implementation process. However, we also find that EITI achieves real results in terms of reducing corruption. We suggest that this is because EITI requires countries to build multi-stakeholder institutions which improve accountability, and provide qualitative evidence about how this has worked in several countries.