There are opportunities and challenges that are inherent in relying on transparency to address identified global issues such as the ‘resource curse’ (Florini, 1999). The first key challenge is that the effectiveness of resource transparency is tied to the ability of the citizens to utilize the information so provided to demand accountability. Hence,
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the resource transparency agenda, especially in situations where complementary public institutions are lacking, could be an illusion. For instance, Besley (2006) believes that such institutions as the rule of law, press freedom, freedom of information, free and fair elections, and the active participation of citizens in governance are necessary conditions for transparency to be effective. It is also believed that because resource revenues sometimes radically reduce the need for taxation, citizens are not sufficiently provoked to supply “the public good of scrutiny over how their taxes are being spent” (Collier, 2007:46). The implication is that even when information is made available, citizens may yet lack the incentive to provide the necessary follow-up hence the objective of accountability may be weakened or not achieved. This raises the question of whether the citizens and institutions in a country are properly positioned to respond to increased transparency in resource wealth management. Kolstad and Wiig (2009:529) also believe that the effectiveness of resource transparency “depends on the level of education of an electorate, the extent to which key stakeholders have the power to hold a government to account, and the private or collective nature of the goods about which information is provided”.
Another challenge in achieving resource transparency is the difficulty in determining the level and amount of information disclosure considered sufficient. For instance, Heald (2006) acknowledges that although sunshine is essential to life, there are dangers in over-exposure to it. Some levels of openness and disclosure could portend dangers for key stakeholders. Governments might consider information disclosure in certain areas inimical to the public interest or critical to the effectiveness of certain policy instruments. There are even greater implications in involving companies and private sector entities in transparency arrangements because they are constantly faced
27 with the challenges of maximizing profit in the face of competition and are usually wary of the risks that disclosure might portend. Gupta (2008) identifies the emphasis on “the power of (due) process” and “empowerment through information” as the two basic assumptions of what she terms “governance-by-disclosure”. She argues that these two assumptions portend some hazards for any system if not carefully monitored.
Kopits and Craig (1998) also argue that there are transaction costs associated with transparency. Effective transparency requires the establishment and maintenance of technical capacity and institutions to ensure an adequate information system. They assert that “the cost of transforming a culture of secrecy into one of transparency may be equally large” (1998:3). However, Vishwanath and Kaufmann (2001) insist that the cost of secrecy is staggering and cannot be compared to the transaction cost of transparency. They also argue that the citizens’ right to know supersedes all arguments against transparency.
However, the challenges posed by the worsening situations in resource-rich countries seem to outweigh the numerous cautions expressed about resource transparency. This rising global risk necessitates that a concerted response is imperative. The Global Witness (2003) in a statement notes that:
“The current status quo is a lose-lose situation for all parties. Ordinary citizens are dispossessed and left reliant on don or assistance. Multinational corporations see their legitimate revenues misappropriated and squandered, and are vulnerable to accusations of complicity with corruption and its attendant reputational risk … M oney from taxpayers in the North is then required in the form of aid to compensate for state failure in the South, which is inefficient and undermines other attempts to improve governance. The
28 international community also faces instability that in some cases may directly threaten the security of energy supply” (Global Witness, 2008:1)
The greater challenge seems to be the question of how best could a global strategy towards resource transparency be organised? Some authors acknowledge that as much as the significance of transparency is often generally acknowledged, actualizing or institutionalizing it is no easy task (Florini, 1999; Mason, 2008). For instance, Truelove (2004: 237) acknowledges that “the need for disclosure is clear, but the means for implementing disclosure are not”. The challenge therefore is in determining the most appropriate and effective strategy for achieving resource transparency.
How best can resource transparency be achieved and what factors would influence the effectiveness of any such strategy? A number of authors have suggested that collective action is the most effective means of achieving resource transparency (Karl, 2007; Collier, 2008). This they believe is due to the fact that resource transparency provides different levels of opportunities and challenges to diverse stakeholders, and as such the collaboration of all stakeholders is essential for the achievement of resource transparency. The form of collective action advocated is different from the traditional systems such as multilateralism or voluntary codes of conduct (COCs). It is believed that while multilateralism does not sufficiently accommodate all the key actors in global governance notably business and civil society organisations (CSO), on the other hand business cannot be trusted to effectively regulate itself through COCs (Kolk and Tulder, 1999; Jenkins, 2001; Utting, 2001; Sullivan, 2003; Beschorner and Muller, 2007; Martens, 2007). In order to deal with the participation and implementation shortfalls of these strategies in the provision of resource transparency, the collective action of all stakeholders in a multi-stakeholder platform
29 is therefore considered most suitable for achieving resource transparency. For instance, Collier (2007: unpaginated) argues that what is required is “an appropriate combination of learning to correct past mistakes, and institutional innovation to correct misaligned incentives”.
However, much as it has been widely advocated, this claim about the suitability of multi-stakeholder initiatives (MSIs) for the provision of resource transparency has not been sufficiently examined in the literature. Empirical studies of MSIs in varied aspects of global governance issues may abound, but their application to the resource transparency agenda is only recent and as such has not been sufficiently examined. Therefore, this study attempts to address this gap in knowledge by seeking answers to the overall research question: what factors influence the effectiveness of collective action for resource transparency?