Responsible researcher: Bruno Benevit
Original Title: Does Information Break the Political Resource Curse? Experimental Evidence from Mozambique
Authors: Alex Armand, Alexander Coutts, Pedro C. Vicente and Inês Vilela
Intervention Location: Mozambique
Sample Size: 2,065 household heads
Sector: Institutions
Variable of Main Interest: Corruption
Type of Intervention: Dissemination of information
Methodology: OLS
Summary
The negative relationship between economic development and export levels of natural resources is a topic historically addressed by economists. This phenomenon is manifested in several African countries rich in oil and diamonds, commonly affected by civil conflicts and corruption. This article aimed to analyze how an information dissemination campaign regarding the discovery of a gas reserve in Mozambique affected indicators of access to information, violence and corruption in 206 communities in the province of Cabo Delgado. Using several measurement instruments for the outcome variables, the authors identified that broad access to information and citizen participation in public deliberations implies an increase in local mobilization and a reduction in violence and resource capture by elites and rent-seeking .
Several countries suffer from the resource curse, a term established by Auty (1993) that establishes a negative relationship between economic development and levels of export of natural resources in countries. This type of situation has become evident in several African countries rich in oil and diamonds, commonly affected by civil conflicts and corruption. In the 1990s, African countries such as Nigeria, Angola and Sierra Leone, rich in oil and diamonds, were economies that had their development penalized by corruption and civil conflicts (Armand et al. , 2020).
Economic theories referring to this phenomenon initially associated the establishment of favorable incentives for rent-seeking in economies with the presence of natural resources, penalizing other more productive economic activities. Consequently, this situation promotes dysfunctional political institutions as the exploitation of such resources becomes centralized, generating conflicts through competition for the enjoyment of these resources.
Given the importance of the behavior of political agents, institutions that promote greater accountability for the exploitation of natural resources among the population become desirable. In this sense, evidence on policies that inhibit the capture of resources by political groups is fundamental for improving economic incentives associated with the exploitation of natural resources in countries.
The objective of this article was to verify whether an information dissemination campaign regarding the discovery of the natural gas reserve in the Rovuma basin, northern Mozambique, affected access to information in local communities, the capture of resources by elites, violence and citizens' perception of violence and benefits. Through a broad coalition sponsored by international, national and local institutions, the dissemination campaign consisted of a large-scale randomized field experiment in 206 communities in northern Mozambique, conducted between March and April 2017. To this end, three approaches for disseminating information: (i) only to community leaders (treatment 1); (ii) for community leaders and citizens (treatment 2); and (iii) without disclosure (control). In addition, approximately half of the communities in treatment 2 also carried out deliberation modules regarding the priority in the allocation of resources resulting from the exploration of the natural gas reserve.
The reserve is located in the province of Cabo Delgado, and represents a discovery of 180 trillion cubic feet of natural gas (IMF, 2016). The province of Cabo Delgado is predominantly rural, with a total of 1.8 million inhabitants, and ranks lowest in human development among all provinces in Mozambique. The discovery represented the potential to transform the country into the third largest exporter of liquefied natural gas (LNG) in the world (Armand et al. , 2020). Mozambique is a low-income country, ranked as the seventh worst in the world in terms of GDP per capita (World Bank, 2017), therefore, the possibility of natural gas exploration had the potential to substantially impact the country's economy.
The publicity campaign provided information regarding natural resources and related legal rights of the population, including the presentation of various laws related to land, mines, forests and fishing. The campaign also provided details about the discovery of the natural gas reserve in Cabo Delgado, exploration plans and the expected consequences for local communities in terms of revenue for the provincial government and job creation.
It is important to highlight that the campaign emphasized the rights of local communities to benefit from the exploitation of natural gas, as established by Mozambican legislation. Such rights include: being informed; have revenues invested locally; be compensated if directly affected; and have priority for employment in the extractive sector. Additionally, the campaign provided information about the successes and failures of other resource-rich countries that faced similar discoveries.
Regarding community leaders, they are the highest-ranking government representatives within each community, being selected by the communities and recognized and remunerated by the state. They should be consulted when natural resources are acquired in the community, and when aid or public programs are to be implemented. Furthermore, its responsibilities include land allocation, application of justice, rural development and performance of formal ceremonies.
Campaign information was mostly provided verbally due to the low level of literacy among study participants. To achieve this, trained agents provided an explanation of the information content in local languages, individually with local leaders in treatments 1 and 2, and in public meetings for treatment 2. In the case of treatment 2, in 91% of the families in the sample for this intervention, at least one member participated in the meetings. Additionally, an informative pamphlet was distributed to leaders (treatments 1 and 2) and citizens (treatment 2) at community meetings. Additionally, the information pamphlet was also distributed door-to-door to community members (treatment 2).
The sample consisted of 206 communities, randomly selected from the list of all 454 voting locations in the province of Cabo Delgado. The samples were stratified into urban, semi-urban and rural areas. Communities were randomly allocated into 4 blocks, with equal probability, to treatment 1, treatment 2 without the deliberation module, treatment 2 with the deliberation module or to the control group.
The sets of outcome variables analyzed referred to aspects of violence, information and perception, and political results. To this end, the article used a series of instruments that included administrative data on georeferenced violent events, behavioral data from structured community activities (ACEs) and laboratory experiments in the field, in addition to survey-based measurements. Data on violent events are available for the entire period analyzed.
The set of violence variables included the occurrence of violent events on two different bases, in addition to participation in violence (binary variable in relation to the last 3 months) and sympathy for violence on the part of citizens through questionnaires. The set of information and perception variables referred to awareness, knowledge of the reserve, and perception of benefits associated with the discovery of the natural gas reserve for the community and for the interviewee's household. Finally, the set of political outcome variables referred to the occurrence of appropriation of resources by elites, favoritism or nepotism for appointments to paid positions, interaction between citizens and leaders, fundraising for community funds, the ability to communication between citizens with provincial and national leaders, and the result of an ACE that verifies the dichotomy between rent-seeking and entrepreneurship (a choice was verified between citizens' participation in meetings with district administrators, conducive to the practice rent -seeking , participation in an activity related to entrepreneurship). All outcome variables were normalized to standard deviations with respect to the control group.
The analyzes sought to identify the effects of interventions on the outcome variables listed above through an ordinary least squares (OLS) specification. In addition to the analysis for each individual outcome variable, the authors also performed analyzes on the aggregate outcome variables for subsets of the violence, information and perception, and political outcomes variables.
The results of the analyzes for the aggregated variables demonstrated different effects between treatment 1, where only the leaders had access to the campaign, and treatment 2, where the community as a whole had access to the campaign. Regarding the impact of treatment 1, the results indicated that this intervention significantly increased the probability of resource capture by elites, leaders and citizens. Regarding the effect of treatment 2, the results demonstrated that there was a significant reduction in the presence of violent events and significant increases in the variables of citizens' benefit perception, citizens' mobilization, demand for government accountability and citizens' information about the discovery of resources. Both treatments positively impacted leaders' information about natural gas reserves.
The evidence identified in the analyzes for individual variables showed similar trends to the results found in the aggregate analysis. While treatment 1 did not show significant impacts on the violence variables, the results on the effect of treatment 2 indicated reductions in the presence of violent events and involvement in violence.
The results of the analyzes for the outcome variables on information and perception about the discovery of the Cabo Delgado reserve indicate that treatment 1 only significantly affected leaders' awareness and knowledge about the resources. On the other hand, treatment 2 resulted in significant gains in terms of access to information and community perception of the discovery. Treatment 2 positively affected citizens' perception of benefits to the community and home. Additionally, this intervention caused an increase in awareness and knowledge for both leaders and citizens.
The results of the analyzes for the political outcome variables indicated significance in several aspects. In terms of resource capture by elites, it was identified that treatment 1 increased the appropriation of public resources and favoritism/nepotism. Regarding rent-seeking , it was identified that both treatments positively affected the interaction between leaders, and that treatment 1 increased the interaction between citizens and leaders and participation in meetings with the district administrator. Treatment 2 was also significant in mobilizing citizens, increasing participation in meetings and fundraising for community funds, in addition to the ability for citizens to communicate with provincial and national leaders.
The authors of this article demonstrated that leaders' restricted access to information about the Cabo Delgado reserve led to the capture of public resources, favoritism/nepotism, and the practice of rent-seeking . However, when the campaigns carried out reached the entire community, no impacts were identified in favor of the capture of resources by the elites. According to the authors, this phenomenon appears to be related to the significant increase in knowledge about the discovery and in the community's awareness of their rights to natural gas reserve resources, resulting in increased scrutiny and accountability for the actions of elites. Furthermore, the results suggest that the improvement in the community's perception of gains implies an increase in the costs of participating in conflicts, being a likely explanation for the reduction observed in violence indicators.
The evidence in this article has improved understanding of how the resource curse manifests itself and the incentives associated with it. In particular, policies that promote transparency, society's participation in the decision-making process and the accountability of political leaders indicate the improvement of institutions in terms of resource allocation and conflict reduction.
References
Armand, A., Coutts, A., Vicente, PC, and Vilela, I. (2020) Does Information Break the Political Resource Curse? Experimental Evidence from Mozambique. American Economic Review , 110 (11), 3431–3453.
Auty, RM (1993) Sustaining Development in Mineral Economies: The Resource Curse Thesis . Routledge, London; New York.
World Bank. (2017) World Development Indicators 2017 . World Bank, Washington, DC.
International Monetary Fund (IMF). (2016) “Republic of Mozambique.” IMF Country Report 16/10. Washington, DC: International Monetary Fund.
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