The Unwritten License: The Social License to Operate in Latin America's Extractive Sector

Produced by: 
Inter-American Development Bank
Available from: 
December 2021
Paper author(s): 
Lenin H. Balza
Lina M. Diaz
Nicolas Gomez-Parra
Osmel Manzano
Institutions and Development

The Latin America and the Caribbean region has benefited significantly from economic growth driven by the extractive sector. At the same time, the region has experienced high levels of conflicts related to this sector. This paper presents an overview of citizens’ per- ceptions of the extractive industries in Bolivia, Colombia, Ecuador, Peru, and Venezuela. Using a representative sample for each country, we identify regional and country-specific determinants of the Social License to Operate (SLO). The SLO is an unwritten license of social approval accorded to extractive projects by citizens. In this paper, we investigate a generalized version of the SLO, capturing public sentiment toward the mining and the oil and gas sectors in general. While our findings confirm that perceptions vary across countries, we show that governance is the strongest predictor of trust between citizens and the extractive sector, which is consistent with the evidence in the literature. In addi- tion, procedural justice, distributive justice, and nationalism play essential roles in shaping individuals’ attitudes. These findings suggest that strengthening government institutions could contribute to the prevention of conflict around extractive industries.



Research section: 
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