A wealth of natural resources can be a blessing or a curse. It has helped to create prosperity in countries such as Norway, Canada, Malaysia, the Gulf states and Scotland. Much of the developing world has unfortunately seen the ugly side: enclaves of wealth amid poverty, waste and corruption and the undermining of productive agriculture and industry with an overvalued exchange rate.
Moreover, windfalls of wealth have created a rent-seeking culture in which living standards are not earned and there is a neglect of entrepreneurial endeavour, technological innovation and hard work.
Each year, international oil, gas, forestry and mining companies make large payments to the governments of resource-rich developing countries, though their citizens see very little of it. Charities have estimated that in Africa this income is six times greater than the aid the continent receives. Where does all this money go?
Too much of it is siphoned away from those who need it most and lodged into foreign bank accounts and offshore tax havens. These vast sums of money that disappear into the coffers of bent politicians and bureaucrats are part of a culture of corruption that is fuelled by a lack of transparency. Instead of being used to fight poverty, boost economic growth and improve social conditions, this money often funds wars and personal vanity projects.
For those companies that do want to operate ethically, this behaviour poses a real problem. They may pay their taxes in perfectly legal manner, but there is no accountability.
In the UK, working with my team of Ed Davey, Norman Lamb and Jo Swinson, as well as other colleagues in the coalition, we have been striving to achieve a balance between promoting transparency without encroaching on commercial confidentiality. The ability to track payments and make a comparison of revenues earned and investment made will combat corruption and ensure that the sale of natural resources benefits the many, not the few.
The standard is set by the US. Thanks to that country's passage of the Dodd-Frank Act, companies are forced to disclose the money they pay to governments above a threshold of $100,000. They must also provide details on each individual project, which contributes to these payments, though there are genuinely tricky problems around the definition of a project. We in the UK are taking the lead within the European Union in promoting the creation of a new global standard for transparency that will cover the majority of the industry's companies.
It's time to put politics aside. Those involved need to get behind this initiative and ensure the EU, ahead of the G8, leads the world in a transparency agenda.
We're confident we can take this first historic step in lifting the lid on the financial dealings between extractive companies and developing countries. These proposals are an important step in reducing corruption and increasing accountability in resource-rich countries.
Dr Vince Cable is Secretary of State for Business, Innovation and Skills