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The Underlying Causes of Brazilian Corruption

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Corruption in Latin America

Abstract

Brazilian institutions have mechanisms that contribute to and incentivize public corruption behavior; their performance affects economic activities in the country. These mechanisms have been conditioned by cultural traits inherited from a Brazilian colonial period that was based on a deeply divided society. The inequality between slaves and landowners remains a central feature of today’s Brazil. Furthermore, Brazil tolerates corruption because of its civil law tradition and because of its strong commitment to individuality. We conclude that corruption affects economic growth and public policies and compromises Brazil’s long-run economic development.

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Notes

  1. 1.

    Daron Acemoglu, Simon Johnson, and James Robinson, “The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth,” American Economic Review, XCV (2005), 546–579; Daron Acemoglu and James Robinson, “Persistence of power, elites, and Institutions,” American Economic Review, XCVIII (2008), 267–293; Daron Acemoglu and James Robinson, “The persistence and change of institutions in the Americas,” Southern Economic Journal, LXXV, (2008), 281–299.

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    G1. ‘PF estima que prejuízo da Petrobras com corrupção pode ser de R$ 42 bi’. O Globo. November 12, 2015. Available on-line at: http://g1.globo.com/pr/parana/noticia/2015/11/pf-estima-que-prejuizo-da-petrobras-com-corrupcao-pode-ser-de-r-42-bi.html [Accessed October 16, 2017]. Former president Luiz Inácio Lula da Silva from the Workers’ Party (PT) is being accused by reports from people involved. Former President Dilma Rousseff was minister and chair of the board of Petrobras during Lula’s term and asserted that she knew nothing about the corruption scheme. President Michel Temer, Dilma’s former vice president (from PMDB), has been accused of passive corruption as well. Daniel Haidar. “Lula era o comandante máximo da organização criminosa”. Folha de São Paulo. September 14, 2016. Available on-line at: http://epoca.globo.com/tempo/noticia/2016/09/lula-e-denunciado-pela-lava-jato.html [Accessed October 16, 2017]. Ricardo Galhardo, “Dilma não pode fugir à responsabilidade”. O Estado de S. Paulo. April 20, 2014. Available on-line at: http://politica.estadao.com.br/noticias/eleicoes,dilma-nao-pode-fugir-a-responsabilidade-diz-ex-presidente-da-petrobras-imp-,1156179 [Accessed October 16, 2017]. A. Benites. ‘Temer é denunciado por corrupção e se torna primeiro presidente a responder por crime durante mandato’. El País. June 27, 2017. Available on-line at: https://brasil.elpais.com/brasil/2017/06/26/politica/1498485882_380890.html [Accessed October 16, 2017].

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    The Quércia family was responsible for repatriating the largest amount of irregular resources ever, according to fiscal agents. Orestes Quércia was a politician from the Brazilian Democratic Movement Party (PMDB) who started his career in 1969 as mayor of Campinas municipality, the richest region in São Paulo state, and died in 2010. Mauricio Lima. ‘A fortuna de Orestes Quércia no exterior’. Revista Veja. July 29, (2017).

  5. 5.

    G1. ‘Dono da JBS gravou Temer dando aval para comprar silêncio de Cunha, diz jornal’. O Globo. May 17, 2107. Available on-line at: https://g1.globo.com/politica/noticia/dono-da-jbs-gravou-temer-dando-autorizacao-para-comprar-silencio-de-cunha-diz-jornal.ghtml [Accessed October 16, 2017].

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    Paragraph translated by the authors from his public letter.

  8. 8.

    President of Petrobrás at the time.

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    Toke Aidt, Corruption, “Institutions, and economic development,” Oxford Review of Economic Policy, XXV, (2009), 271–291; Paolo Mauro, “Corruption and growth.” Quarterly Journal of Economics), CX, (1995), 681–712; Jakob Svensson, “Eight questions about corruption,” Journal of Economic Perspectives, XIX, (2005), 19–42.

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    Andrei Shleifer, and Robert Vishny, “Corruption,” Quarterly Journal of Economics, CVIII, (1993), 599–617; Gunnar Myrdal, Asian Drama; an inquiry into the poverty of nations. (New York, Pantheon 1968); Eatzaz Ahmad, Muhammad Aman Ullah, and Muhammad Irfanullah Arfeen. “Does corruption affect economic growth?” Latin American Journal of Economics, XLIX, (2012), 277–305.

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    Ukoha Ukiwo, “From “pirates” to “militants”: A historical perspective on anti-state and anti-oil company mobilization among the Ijaw of Warri, Western Niger Delta,” African Affairs,  CVI,  (2007),, 587–610; Peter Seaborn Smith, “Petrobras: The politicizing of a state company, 1953–1964,” Business History Review, XLVI, (1972),182–201.

  12. 12.

    Douglas North, “Institutions,” Journal of Economic Perspectives, V,  (1991), 97–112; Daron Acemoglu and James Robinson, “Persistence of power, elites, and institutions,” American Economic Review, XCVIII, (2008), 267–293; Daron Acemoglu, Simon Johnson, and James Robinson, “The rise of Europe: Atlantic trade, institutional change, and economic growth,” American Economic Review, XCV,  (2005), 546–579.

  13. 13.

    Douglas North, “Institutions,” Journal of Economic Perspectives, V (1991), 97–112; Oliver Williamson, “The institutions of governance,” American Economic Review, LXXXVIII, (1998), 75–79.

  14. 14.

    Andrei Shleifer and Robert Vishny, “Corruption,” Quarterly Journal of Economics, CVIII  (1993), 599–617; Gilberto Freyre, Casa-grande and senzala: Formação da familia brasileira sob o regime de economia patriarcal (São Paulo, Schmidt, 1938), 64–497; Sergio Buarque de Holanda, Raízes do Brasil (Rio de Janeiro, José Olympio, 1976), 132–152; Raymundo Faoro, Os donos do poder - Formação do patronato político brasileiro (Porto Alegre, Editora Globo, 1958), 156–560.

  15. 15.

    Celso Furtado, Economic development of Latin America: Historical background and contemporary problems (New York, Cambridge University Press, 1976).

  16. 16.

    Gilberto Freyre, Casa-grande and senzala: Formação da familia brasileira sob o regime de economia patriarcal (São Paulo, 1938), 64–498.

  17. 17.

    Sergio Buarque de Holanda, Raízes do Brasil (Rio de Janeiro, 1976), 132–152.

  18. 18.

    Gilberto Freyre, Casa-grande and senzala: Formação da familia brasileira sob o regime de economia patriarcal (São Paulo, 1938), 64–498.

  19. 19.

    Raymundo Faoro, Os donos do poder - Formação do patronato político brasileiro (Porto Alegre, 1958), 156–560.

  20. 20.

    Sergio Buarque de Holanda, Raízes do Brasil (Rio de Janeiro, 1976), 132–188.

  21. 21.

    Considering that we chose data from China and Russia, there is the probability of distortions due to political influence on the dissemination of official government information.

  22. 22.

    Marc Morgan, “Extreme and persistent inequality: New evidence for Brazil combining national accounts, surveys and fiscal data, 2001-2015,” WID.world Working Paper Series 12, (2017). Available on http://wid.world/document/extreme-persistent-inequality-new-evidence-brazil-combining-national-accounts-surveys-fiscal-data-2001-2015-wid-world-working-paper-201712/.

  23. 23.

    Buarque de Holanda, Raízes do Brasil, 132–152.

  24. 24.

    Ibid. 132–152.

  25. 25.

    Ibid. 132–188.

  26. 26.

    Martha Kernel ‘IOC suspends Carlos Nuzman after gold bar corruption allegation’, Guardian. October 06, 2017. Available on-line at: https://www.theguardian.com/sport/2017/oct/06/ioc-suspends-rio-2016-chief-carlos-nuzman [Accessed October 16, 2017].

  27. 27.

    It is worth noting that there are differences in colonization in diverse Brazilian regions, especially considering immigration movements to São Paulo and the Southern region, encompassing a middle class usually linked to commercial activities. Referring to the general cultural orientation in Brazil, however, cultural influences are generally equally distributed throughout the country.

  28. 28.

    Eduardo Giannetti, Vícios privados, benefícios públicos? (São Paulo, Companhia das Letras, 1996), 12–238.

  29. 29.

    Paulo Maluf was the governor of São Paulo state, former mayor of São Paulo municipality, former congressmen, and two-time presidential candidate.

  30. 30.

    There are studies that describe illegitimate children of white proprietors and black slaves who inherited the fortunes of their parents and curiously also became masters of slaves, which illustrates social mobility since the beginning in Brazil. Note, however, that social mobility exists as isolated event, in general connected to receiving significant amounts of money, for example, including the cases of famous soccer players who started out life poor.

  31. 31.

    Philippe Aghion and Peter Howitt, Endogenous growth theory (Cambridge, MA, MIT Press, 1999), 403–448.

  32. 32.

    Shleifer and Vishny, “Corruption,” 599–617.

  33. 33.

    Robert I. Rotberg, The corruption cure: How citizens and leaders can combat graft (Princeton, Princeton University Press, 2017), 290–309.

  34. 34.

    Bernard Manin, Adam Przeworski, and Susan Stokes, “Eleições e representação,” Lua Nova (2006), 67, 105–138.

  35. 35.

    Marcelo Medeiros, “A trajetória do Welfare State no Brasil: Papel redistributivo das políticas sociais dos anos 1930 aos anos 1990,” Texto para Discussão do Instituto de Pesquisa Econômica Aplicada (Brasília, 2001), 5–21.

  36. 36.

    Ibid.

  37. 37.

    Wilhelm Hofmeister, Partidos políticos: Quatro continents (Rio de Janeiro, Cadernos Adenauer, 2007), VIII, 9–32.

  38. 38.

    Marcelo Baquero, “Corruption, political culture and negative social capital in Brazil,” Revista Debates, IX (2015), 139–157.

  39. 39.

    Fernando Filgueiras, “A tolerância à corrupção no Brasil: Uma antinomia entre normas morais e prática social,” Opinião Pública, XV, (2009), 1, 386–421.

  40. 40.

    Andrei Shleifer, and Robert Vishny, “Corruption,” Quarterly Journal of Economics (1993), 599–617; Taylor Boas, Fernando Daniel Hidalgo, and Neal Richardson, “The spoils of victory: campaign donations and government contracts in Brazil,” Journal of Politics, LXXVI, (2014), 415–429.

  41. 41.

    Raymundo Faoro, Os donos do poder - Formação do patronato político brasileiro (Porto Alegre, Editora Globo, 1958),. 156–560.

  42. 42.

    Pork barrel is the use of government funds for projects designed to please voters or legislators. David Samuels, “Pork barreling is not credit claiming or advertising: Campaign finance and the sources of the personal vote in Brazil,” Journal of Politics, LXIV, (2002), 845–863.

  43. 43.

    Ivan Chaves Jucá, Marcus André Melo, and Lucio Rennó, “The political cost of corruption: scandals, campaign finance, and reelection in the Brazilian Chamber of Deputies,” Journal of Politics in Latin America, VIII (2016), 336.

  44. 44.

    Eduardo Leoni, Carlos Pereira, and Lúcio Rennó, Estratégias para sobreviver politicamente: escolhas de carreiras na Câmara de Deputados do Brasil, Opinião Pública, IX (2003), 44–67; Felipe Botero and Lúcio Rennó, “Career choice and legislative reelection: Evidence from Brazil and Colombia,” Brazilian Political Science Review, I (2007), 102–124.

  45. 45.

    Luís Roberto Barroso. “Constituição, democracia e supremacia judicial: Direito e política no Brasil contemporâneo”. Revista Jurídica da Presidência, XII (2010), 5–43.

  46. 46.

    Carlos Pereira and Lúcio Rennó. “O que é que o reeleito tem? O retorno: O esboço de uma teoria da reeleição no Brasil. Revista de Economia Política, XXVII (2007), 664–683; Adla Youssef Bourdoukan, “Ambição e carreiras políticas no Brasil” (2005). (Master in Political Science thesis) - University of São Paulo.

  47. 47.

    David Samuels. “Ambition and competition: Explaining legislative turnover in Brazil.” Legislative Studies Quarterly, XXV, (2000), 481–97.

  48. 48.

    Matthew Taylor. “O judiciário e as políticas públicas no Brasil.” Dados - Revista de Ciências Sociais, L (2007), 229–257.

  49. 49.

    Luís Roberto Barroso. “Constituição, democracia e supremacia judicial: Direito e política no Brasil contemporâneo,” Revista Jurídica da Presidência, XII (2010), 5–43.

  50. 50.

    Guillermo O’Donnell, “Accountability horizontal e novas poliarquias,” Lua Nova, XLIV (1998), 27–54.

  51. 51.

    Paul G. Mahoney, “The Common Law and Economic Growth: Hayek Might Be Right.” Journal of Legal Studies, XXX (2001): 503–25.

  52. 52.

    Axel Dreher and Friedrich Schneider, “Corruption and the shadow economy: an empirical analysis,” Public Choice, CXLIV (2010), 215–238.

  53. 53.

    Interviewing a small industry entrepreneur who employs 20 workers, he reports his business as paying around 57 different taxes and fees each year. There are currently 93 taxes and tributes in the country (www.portaltributario.com.br).

  54. 54.

    Shleifer, and Vishny, “Corruption,” Quarterly Journal of Economics (1993), 599–617.

  55. 55.

    It is worth noting that police wages are extremely low, considering their poor working conditions.

  56. 56.

    In general, the entrepreneur must go to a police district where all negotiations are done with small pieces of paper, where public agents write the amount they want. Thus, no direct words are exchanged, and it is impossible to record or film the transactions, even secretly.

  57. 57.

    Abhijit Banerjee, Rema Hanna, and Sendhil Mullainathan, “Corruption,” Working Paper Series 17968. National Bureau of Economic Research (2012).

  58. 58.

    Adriana da Silva. ‘Banho de loja da mulher de Cunha: como gastar R$ 64 mil em 3 dias em Paris’. UOL. October 30, 2016. Available on-line at: https://noticias.uol.com.br/politica/ultimas-noticias/2016/03/30/banho-de-loja-da-mulher-de-cunha-como-gastar-r-64-mil-em-3-dias-em-paris.htm?cmpid=copiaecola [Accessed October 16, 2017].

  59. 59.

    https://blogs.imf.org/2017/09/21/corruption-in-latin-america-taking-stock/ [Accessed October 20, 2017].

  60. 60.

    To illustrate the time for justice in Brazil, we can cite the Bateau Mouche ship, which sank on its way to Copacabana Beach in 1988, killing 55 passengers and becoming the greatest tragedy in the nautical history of Rio de Janeiro. By 2015, after nearly 27 years, only two families had received compensation, and none of those responsible had been arrested. Barbara Marcolini. ‘O Globo, 90 anos: A tragédia do réveillon que virou símbolo da impunidade no país’, O Globo. July 02, 2015. https://oglobo.globo.com/rio/o-globo-90-anos-tragedia-do-reveillon-que-virou-simbolo-da-impunidade-no-pais-16633845#ixzz4uxWUVghP [Accessed October 16, 2017].

  61. 61.

    Brazilian Institute of Research in Applied Economics (www.ipeadata.gov.br).

  62. 62.

    John Fraser Muth, “Rational expectations and the theory of price movements,” Econometrica, XXIX (1961), 315–335; Tomas Sargent and Neil Wallace, “‘Rational’ expectations, the optimal monetary instrument, and the optimal money supply rule,” Journal of Political Economy, LXXXIII (1975), 241–254.

  63. 63.

    Jose Matias Pereira, Reforma do Estado e controle da corrupção no Brasil, Revista de Administração Mackenzie, IV (2003), 40–58.

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Authors and Affiliations

  1. Institute of International Relations, University of Sao Paulo, São Paulo, SP, Brazil

    Marislei Nishijima

  2. School of Arts, Sciences and Humanities, University of Sao Paulo, São Paulo, SP, Brazil

    Flavia Mori Sarti

  3. Department of Economics, Boston University, Boston, MA, USA

    Regina Célia Cati

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  1. Marislei Nishijima
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  2. Flavia Mori Sarti
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Correspondence to Marislei Nishijima .

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  1. Harvard Kennedy School, Lexington, MA, USA

    Robert I. Rotberg

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Nishijima, M., Sarti, F.M., Cati, R.C. (2019). The Underlying Causes of Brazilian Corruption. In: Rotberg, R.I. (eds) Corruption in Latin America. Springer, Cham. https://doi.org/10.1007/978-3-319-94057-1_2

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