The broader governance environment, based on more than 30 external measures of accountability, government effectiveness, rule of law, corruption and democracy.
The Enabling Environment component captures the broad governance environment in which the extractive sector operates. Thirty four out of the 58 countries receive failing scores (below 40) on this component, meaning that a majority of countries exhibits high levels of corruption, limited government effectiveness, opaque budgets, and/or the absence of democratic institutions and rule of law. Only seven countries, such as Chile and Norway, score satisfactorily (above 70) (see Figure 1).
Many countries that score poorly in the enabling environment also score poorly in the three components discussed above which specifically address the oil, gas or mining sector. However, the performance in sector specific components does not move in tandem with broader governance indicators. Several countries receive relatively lower scores on the enabling environment component, such as Timor-Leste and Liberia. These two countries exhibit a number of strong policies and practices related to natural resource transparency, an area that the current governments have prioritized. Their enabling environment scores, however, reflect the vast governance challenges facing these post-conflict countries with weak institutions, especially in the areas of government effectiveness and the rule of law.
Additional countries, such as Azerbaijan, Russia and Venezuela, also score worse on this component due to their weak records in controlling corruption, protecting civil and political liberties, and fostering democratic accountability. In such environments, natural resource transparency alone is less likely to improve the ability of citizens to hold governments accountable.
South Africa, Botswana and Malaysia exemplify the contrary trend where governance and transparency in the natural resource sector appears to be areas of relative weakness when compared with the broader governance environment. South Africa topped the Open Budget Index in 2010, indicating that the government provides the public with extensive information on the central government's budget and fiscal activities. However, transparency does not extend to the extractive industries where disaggregated mining revenue data is not published. In Botswana, despite a stable political environment and high government effectiveness, very little information is actually published by the state on the mining sector. In these cases, resource governance and transparency are problem areas that lag behind the overall governance performance.