Natural Resources and Violent Conflict - WaterWiki.net

attracting reputable companies 309Table 7.4 Standards of Compliance among Companies fromSelect Non-OECD Countries, 1999 and 2002Country Average in 1999 Average in 2002Singapore 2.3 2.11Hong Kong (China) — 2.47Malaysia — 3.10South Africa 2.6 3.10China 2.9 3.19India — 3.29Brazil 3.1 3.41— Not available.Source: Control Risks Group (2002).other leading non-OECD economies are more likely to pay bribes iftheir competitors are doing so (table 7.4).From a strategic point of view, large Western companies have nochoice but to comply with domestic and international legislation (evenif individual executives may fall short). Although there may be questionsabout implementation, these companies are in practice increasinglybound by voluntary ethical guidelines as well.This does not mean that good companies are unable to operate incountries where such standards are not respected, but it may be moredifficult. For example, through patient and persistent application, itmay be possible to obtain a license honestly even if companies are normallyexpected to pay a bribe. However, the process is likely to takelonger. Senior executives may decide that the high transaction costs—as measured in management time—are not justified, and the companywill leave the field to smaller companies with lower standards.Managing the Investment Cycle: What Companies NeedExtractive-industry companies face different risks at different stages ofthe investment cycle. This section analyzes the four main stages of aproject’s life—investment, construction, operation, and closure. It discussesthe risks that companies face and what they need to make theirprojects successful. What companies most need is predictability. Effectivegovernment structures provide a framework for decisionmakingand a means of resolving disputes. However, particularly in zones ofactual or potential conflict, commercial development is unlikely to besmooth. The next section analyzes the part played by different externalactors in greater detail.