Tracking Underreported Financial Flows | Geospatial Impact Evaluations | Natural Resources and Economic Growth in Liberia
Can Liberia escape the "resource curse" by demanding more from foreign investors in the natural resource sector?
The Liberian government has granted more than a third of the country's land to investors through concession agreements.
Liberia's "Development Corridor" Strategy
Source: Government of Liberia, 2010. This map was provided by Dr. Lucie Phillips of IBI International upon request, and we are republishing it with permission from Mr. Sebastian Muah, who oversaw the preparation of the Government of Liberia's development corridor strategy during his period of service as Deputy Minister for Economic Affairs and Policy in Liberia's Ministry of Planning and Economic Affairs.
Concentrating infrastructure investments
In exchange for contractual rights to extract and export natural and nonrenewable resources, the central government has required that foreign investors build and maintain public infrastructure, such as roads, bridges, ports, and electricity grids. Its goal is to target and co-locate these infrastructure investments in specific geographic areas in order to set in motion broader economic agglomeration processes and establish new "growth poles" or "development corridors."
From the First Tranche:
What are development corridor strategies, and do they work? →
Has this strategy worked?
Four key findings from the report
Natural resource concessions improve local economic growth outcomes.
Mining concessions have a positive effect on local economic growth outcomes.
Corporate social responsibilty (CSR) projects do not have detectable effects on local economic growth outcomes.
U.S. concessions do not have any discernible effect on local economic growth, while Chinese concessions do.
Pioneering innovative new research methods leads to a more complete picture.
Phase 1: Tracking the universe of FDI in the natural resource sector
Compiling a first-of-its-kind dataset of natural resource concessions
In partnership with the Concessions Working Group in Monrovia, AidData developed a first-of-its-kind dataset of all known natural resource concessions granted to investors in Liberia from 2004 to 2015. We systematically categorized 557 concessions on 43 different dimensions, including the names and nationalities of the investors, the nature of the rights granted to these investors (exploratory or extractive), and the presence or absence of contractual commitments to undertake corporate social responsibility activities. We also developed a novel, polygon-based (rather than point-based) geocoding methodology that identifies the specific tracts of land granted to investors to explore, develop, extract, or sell natural resources.
Phase 2: Testing hypotheses with credible counterfactual evidence
Estimating the net effect of concessions on economic growth with quasi-experimental methods
Using AidData's geospatial impact evaluation methods and tools, an interdisciplinary team of researchers from the College of William and Mary, the University of Texas at Dallas, the London School of Economics, and TrustAfrica estimated the effects that different types of concessions and concessionaire attributes have on local economic growth outcomes. These methods — using high-resolution satellite imagry and matching natural resource concessions with a rich set of covariate data — establishd a credible counterfactual, enabling the comparison of grid cells from a treatment cohort (i.e. cells near a land concession) with similar areas that did not receive treatment.