Peter Ekeh's theory of corruption views it as an expression of loyalty to what he calls 'primordial' groups at the expense of more formal civic institutions. This paper explores what might be learned about discouraging rent seeking and corruption around mines by combining the primordial versus civic distinction with the social capital based concept of 'the radius of trust'.Macroeconomic studies have identified corruption and rent-seeking as key factors in generating the curse of natural resources. 'The curse' consists of a tendency for economies rich in natural resources, such as precious metals and oil, to grow more slowly than those without such endowments. Recommendations for avoiding the curse have been directed at national governments and extractive companies but very little advice is available for local mine managers. To examine how Ekeh's theory and social capital based concepts might help provide such recommendations, this paper reports on specific actions taken by site level management of a gold mine in Papua New Guinea to combat corruption and rent seeking by a few stakeholders. The case featured a clear set of primordial groups (i.e., traditional clans) and a set of civic institutions (i.e., administrative institutions continued from the colonial era). The findings are compatible with a more general interpretation of Ekeh's theory and corroborate anthropological findings of changes in group boundaries when traditional communities start receiving compensation or royalties for resource extraction.In terms of relevance for mine managers, it was found that institution-oriented strategies (e.g., legal defenses, education in trust fund protection, and the exclusion of selected local authorities from fund distribution chains) produced only temporary reduction in corruption, bribery, and rent-seeking. A more promising approach might be to treat corruption and rent seeking as a type of collective action problem. Such problems are frequently resolved with multi-party initiatives that expand the radius of trust.
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