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Reversing the Resource Curse: Foreign Corruption Regulation and the Local Economic Benefits of Resource Extraction
Reversing the Resource Curse: Foreign Corruption Regulation and the Local Economic Benefits of Resource Extraction
Hans B. Christensen
Mark Maffett
Thomas Rauter
American Economic Journal: Applied Economics (Forthcoming)
Abstract
We examine how foreign corruption regulation affects the economic
benefits communities receive from extraction activities in resource-rich areas of
Africa. After a mid-2000s increase in enforcement of the US Foreign Corrupt
Practices Act (FCPA), nighttime luminosity increases by 15% (5%) in communities
within a 10-(25-) kilometer radius of affected extraction facilities. Cash-wage
employment also increases significantly, suggesting that the economic benefits are
not limited to electricity access. Consistent with foreign corruption regulation
mitigating the political resource curse, we find that perceived corruption decreases
following the rise in FCPA enforcement.
