Transparency Initiative (EITI)

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5.2.4 TRADE AND INVESTMENT CLIMATE
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There is methodologically robust, however rather outdated
evidence regarding the contribution of the EITI
to the improvement of the environment for foreign direct
investments (FDI).
COVERING THE STANDARD 2013:
n/a
response to NEITI but rather to macro-economic data
like political stability or world market prices for raw
materials. Also for Gabon (p. 17) and Mongolia (p. 22) it
states that there is no clear evidence due to the number and
magnitude of intervening socio-economic and political
factors. According to the study even the quantitative
analysis of global data does not prove any causality
between the initiative and the business environment in the
participating countries (p. 32ff).
BEFORE THE STANDARD 2013:
Schmaljohann (2013) used a panel of 81 countries, aimed
at analyzing the effect of implementing the EITI on FDI by
means of regression analyses, including not only the outcome
variable of interest (i.e. FDI in-flows/GDP) but also
a number of independent co-variates for controlling confounding
factors and selection bias (i.e. voluntariness). The
findings from the data analysis show an average increase
of the ratio of FDI inflows to GDP of about two percentage
points, which equals an average absolute increase of about
40%.
Similar positive results can be found in the IADB report
(2013: 23) that states a positive association between EITI
implementation and the business freedom index of the
World Economic Forum. It concludes that “Since higher
values of this index indicates better investment climate, the
positive relationship between business freedom index and
EITI membership suggests that fiscal transparency tends to
improve investment climate.”
The results of the quantitative analysis of Schmaljohann
and the IADB are backed by further findings from qualitative
studies such as Neumann (2014: 6) that declares that according
to informal statements from banking industry experts,
the interest rate for capital is up to 0.5 percentage
points lower for projects that are financed in EITI implementing
countries compared to non-EITI countries. Furthermore,
it indicates implicit incentives for investments
based on expert assessments (p.7).
In contrast, the Scanteam 2011 report draws a rather
sobering picture. As for the case of Nigeria it concludes that
“The larger business environment appears not sensitive
to NEITI activities.” (p. 13). It reasons this finding with
the results of the analysis of indicators of the quality of
business environment that did not show any significant