Matthew Genasci & Sarah Pray, Extracting Accountability: Implications of the Resource Curse for CSR Theory and Practice

Abstract

Matthew Genasci and Sarah Pray argue that the best cure for the "resource curse" in developing nations is increased transparency through compliance with the Extractive Industries Transparency Initiative (EITI). This argument is composed of two distinct claims. First, Genasci and Pray claim that the root cause of the resource curse is the lack of government accountability that results from reliance on resource rents rather than popular taxation for most government revenue. Second, they contend that increased transparency in the flow of funds to governments of resourcerich developing nations from corporations involved in the extraction of resources is the best way to increase government accountability. While there is persuasive evidence that low government accountability is at the heart of the resource curse, the link between this claim and identifying transparency as the best solution is tenuous. Achieving transparency may not cure the curse where civil society is not strong enough to convert information into accountability. Since a relative lack of taxation is behind the accountability deficit, a solution involving increased taxation might be best. I propose such a solution: taxed distributions of funds directly from extracting corporations to citizens of resource-cursed nations.