Economies of Scale and Perceived Corruption in Natural Resource Management: A Comparative Study between Ukraine, Romania, and Iceland

Abstract

The aim of this paper is to enhance understanding of factors that undermine sustainable management of renewable resources by identifying and analyzing the main drivers and dynamics involved, with a focus on the role of corruption perceptions and its implications. To shed light on the research question, we chose to perform a comparative study of three different resource sectors in European countries that are ranked differently on the Corruption Perception Index by Transparency International, namely fisheries in Iceland, forestry in Romania, and arable soils in Ukraine. We conducted 40 in-depth semi-structured interviews with various stakeholders to explore assumptions on individual actions and behavior in the sectors. The interviews were analyzed using a qualitative coding procedure based on causal loop diagrams, a method from system dynamics. The results indicate that even though the cases are different, they share a similar outcome, in that privatization of the resource and consolidation of companies took place, along with perceived risk of both unsustainable resource management practices and corruption. Our findings suggest that the underlying similarities of the cases are that privatization occurred around the same time in early 1990s, when neoliberal economic ideology influentially held up the idea that private ownership meant better management. What followed was a transition to economies of scale that ultimately resulted in dominance of large vertically integrated companies in the sectors. The resulting inequalities between large and small actors in the renewable resource management systems serve to increase the risk for unsustainable management decisions as well as increase perceptions of corruption risks, especially amongst smaller actors in the sectors.

Illicit activity and scarce natural resources in the supply chain: A literature review, framework, and research agenda

“…Thus, supply chain researchers could strive to identify the circumstances whereby enabling processes (corruption, organized crime, and regulatory capture) are vulnerable, and intervention by inhibiting processes (monitoring, governance, enforcement, regulation) might prove useful. Conceptual and qualitative research could be conducted on strategies for mitigating illicit natural resource use (Gisladottir et al, 2021). This new area of research could be informed by previous research on regulating the flow of counterfeit medicines in the supply chain (de Lima et al, 2018) and the use of anti‐theft devices on delivery vehicles (Urciuoli, 2020).…”

“…Conceptual and qualitative research could be conducted on strategies for mitigating illicit natural resource use (Gisladottir et al, 2021). This new area of research could be informed by previous research on regulating the flow of counterfeit medicines in the supply chain (de Lima et al, 2018) and the use of anti-theft devices on delivery vehicles (Urciuoli, 2020).…”

Public participation in marine spatial planning in Iceland

“…Grounded in a desire to fight overfishing and make Icelandic fisheries more sustainable, the fishing quota system was overhauled and basically privatised by making individual quota fully transferrable in the years leading up to 1990 (Chambers and Carothers, 2017;Kokorsch and Benediktsson, 2018). The socio-economic effects of the introduction of the Individually Transferrable Quota (ITQ) system were widely felt and included a consolidation of fishing quota in urban rather than rural areas, leaving many remote coastal communities vulnerable (Kokorsch and Benediktsson, 2018), increasing inequalities between bigger and smaller fisheries and increasing the perceived risk of corruption (Gisladottir et al, 2021). Kokorsch et al, (2015) studied power dynamics of different stakeholders in Icelandic fisheries policymaking over time and found that the level of power of local communities specifically had decreased after the introduction of the ITQ system.…”

Transparency of agriculture companies: rationale of responsible investment for better decision making under sustainability

“…However, these studies give the transparency an important role in promoting SDGs values. Gisladottir et al (2021) on the example of agricultural companies engaged in the sustainable management of renewable resources in Ukraine, Iceland and Romania emphasize the importance of access to the sphere not only of large, vertically integrated companies, but also small players, which increases transparency in agriculture. Abdullah (2020) on the example of agricultural companies in Southeast Asian region proves the link between sustainability transparency and firm performance.…”