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Fighting Political Corruption: Evidence from Brazil

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Institutions, Governance and the Control of Corruption

Part of the book series: International Economic Association Series ((IEA))

Abstract

Political corruption is widespread across many developing countries and it is considered a major impediment to economic development. But we have limited evidence on the effectiveness of anti-corruption policies. This chapter summarizes the extent to which government audits of public resources reduces corruption in the context of Brazils anti-corruption program that randomly audits municipalities for their use of federal funds.

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Notes

  1. 1.

    See, for example, Di Tella and Schargrodsky (2003), Ferraz et al. (2012), Fisman et al. (2014), Olken (2007).

  2. 2.

    See Olken and Pande (2012) for a review of the literature.

  3. 3.

    See Power and Taylor (2011).

  4. 4.

    See Mainwaring (2003), Taylor and Buranelli (2007), Power and Taylor (2011), Praca and Taylor (2014), Prado and Carson (2016).

  5. 5.

    See Taylor and Buranelli (2007), Speck (2011), Praca and Taylor (2014), Prado and Carson (2016).

  6. 6.

    See Taylor and Buranelli (2007) and Arantes (2011).

  7. 7.

    See Ferraz and Finan (2011) for an overview of corruption practices in Brazil’s local governments.

  8. 8.

    See http://www.cgu.gov.br/assuntos/auditoria-e-fiscalizacao/acoes-investgativas/operacoes-especiais.

  9. 9.

    See Ferraz and Finan (2008) and Loureiro et al. (2012) for details.

  10. 10.

    This rule has changed over time going from 3 to 12 lotteries.

  11. 11.

    See Avis et al. (2016).

  12. 12.

    Ferraz and Finan (2008) find no evidence that auditors manipulate the audit reports according to municipal and mayor characteristics such as political competition or specific parties. In a recent study of Brazil’s federal government, Bersch et al. (2016) found the CGU to be one of the government’s most autonomous and least politicized agencies.

  13. 13.

    Olken and Pande (2012) summarize different approaches taken by researchers to uncover and measure corruption.

  14. 14.

    A similar measure was used by Brollo et al. (2013).

  15. 15.

    These data are similar to those used by Zamboni and Litschig (2015), except that our dataset spans a longer period of time. The classification used by the CGU to distinguish between moderate and severe irregularities does not map directly onto the categories used either by Ferraz and Finan (2008) or Brollo et al. (2013). See Zamboni and Litschig (2015) for a discussion of this point.

  16. 16.

    See Besley (2007) for a theoretical framework that describes discipline and selection effects.

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Acknowledgements

We thank Laura Chioda and seminar participants at the World Bank/RIDGE/IEA Roundtable on Institutions, Governance, and Corruption for helpful discussions and comments.

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Authors and Affiliations

  1. Department of Economics, Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Rua Marquês de São Vicente, 225- Gávea, Rio de Janeiro, Brazil

    Claudio Ferraz

  2. BREAD, Cambridge, MA, USA

    Claudio Ferraz

  3. Department of Economics, UC Berkeley, 508-1 Evans Hall, Berkeley, CA, 94720-3880, USA

    Frederico Finan

  4. BREAD, Cambridge, MA, USA

    Frederico Finan

  5. IZA, Bonn, Germany

    Frederico Finan

  6. NBER, Cambridge, MA, USA

    Frederico Finan

Authors
  1. Claudio Ferraz
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Correspondence to Claudio Ferraz .

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Editors and Affiliations

  1. The World Bank, Washington, DC, USA

    Kaushik Basu

  2. The World Bank, Washington, DC, USA

    Tito Cordella

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Ferraz, C., Finan, F. (2018). Fighting Political Corruption: Evidence from Brazil. In: Basu, K., Cordella, T. (eds) Institutions, Governance and the Control of Corruption. International Economic Association Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-65684-7_9

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  • DOI: https://doi.org/10.1007/978-3-319-65684-7_9

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