Can transparency reduce corruption? -- Evidence from firms in Peru and Mali on the impact of the Extractive Industries Transparency Initiative (EITI) on corruption

The past decade has seen a push towards rigorous policy evaluation and new, exciting methodologies have evolved to get a better sense of how effective policy interventions are in achieving their desired outcomes. Unfortunately, few of these efforts were aimed at governance reform initiatives, especially not at transparency reforms which have received almost univocal support from policy makers and practitioners as a means to cure a whole range of problems that hamper the growth performance of resource-rich countries, namely corruption. This thesis tries to fill this gap by triangulating a series of different methodologies to conduct both a cross and within-country evaluation of the effectiveness of the Extractive Industries Transparency Initiative (EITI) in reducing corruption in two EITI countries, Peru and Mali. I use firm level data from the World Bank Enterprise Surveys (WBES) and country level economic and social indicators from the World Development Indicators (WDI) and apply two preprocessing methods developed by Abadie and Hainmueller -- entropy balancing and synthetic control groups -- as well as within-country difference-in-difference estimations to measure the impact of EITI on reported corruption. The results show a robust reduction of corruption in Peru, where corruption has been reduced by as much as 14 percentage points since the introduction of EITI, while no such effect can be found in Mali. This paradox can be explained by two standard critiques of the EITI: that it is only effective when a functioning civil society is in place prior to EITI implementation; and that the voluntary nature of the initiative may induce large differences in outcomes between countries.