Breaking the Weak Governance Curse: Global Regulation and Governance Reform in Resource-rich Developing Countries

There is growing consensus that unless resource-rich developing countries improve their domestic governance systems, rising exploitation of mineral, oil and gas resources may result in long-term adverse developmental outcomes associated with the “resource curse”. Despite the consensus, reforms do not abound. This dissertation investigates the obstacles to such reforms, and the mechanisms and strategies that can possibly overcome these obstacles. I argue that two trapping mechanisms are binding these countries to a “weak governance curse”. One mechanism is the phenomenon of path dependence, which makes a dysfunctional governance path initiated at a past historical juncture resistant to change over time. The other mechanism is rent-seeking behaviour associated with high resource rents, which creates perverse incentives for political and economic actors to resist reforms. The Law and Development literature has recently produced a rich body of knowledge on governance reform in developing countries, yet it has largely neglected the potential role of innovative global regulatory mechanisms, beyond development assistance, in this process. I argue that this evolving literature ought to draw from global regulation studies to investigate the interaction between unconventional global regulatory mechanisms and domestic governance reform. In this thesis I analyze whether extraterritorial home country regulations, such as anti-bribery, anti-money laundering and securities disclosure regulations, and transnational public-private partnerships, such as the Extractive Industries Transparency Initiative, may offer institutional opportunities for external and internal actors to facilitate policy reforms in resource-rich and governance-poor countries. My conclusion is twofold. First, there is reason for cautious optimism regarding the potential for unconventional global regulatory mechanisms to provoke positive feedback effects in domestic governance reform. These mechanisms can open innovative institutional pathways of influence to outsiders and insiders promoting governance reform. Second, instead of searching for a regulatory silver bullet, the most promising way to promote reforms in resilient dysfunctional governance systems is to make use of the wide range of conventional and unconventional mechanisms available. A constellation of regulatory instruments opens up the possibility for outside and inside reformers to benefit from a different policy mix of available mechanisms, depending on the specific circumstances of a given country at a particular time.SJ