Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
The Ways of Corruption in Infrastructure: Lessons from the Odebrecht Case
Journal of Economic Perspectives
vol. 35,
no. 2, Spring 2021
(pp. 171–90)
(Complimentary)
Abstract
In 2016, the Brazilian construction firm Odebrecht was fined 2.6 billion USD by the US Department of Justice. It was the largest corruption case ever prosecuted under the US Foreign Corrupt Practices Act. Our examination of judicial documents and media reports on this case provides new insights on the workings of corruption in the infrastructure sector. Odebrecht paid bribes for two reasons: to tailor the terms of the auction in its favor, as well as to obtain favorable terms in contract renegotiations. In projects where Odebrecht paid bribes, costs increased by 70.8 percent on average, compared with 5.6 percent for projects with no bribes. We also find that bribes and profits made from bribing were smaller than documented in most previous studies, in the range of one to two percent of the cost of a project.Citation
Campos, Nicolás, Eduardo Engel, Ronald D. Fischer, and Alexander Galetovic. 2021. "The Ways of Corruption in Infrastructure: Lessons from the Odebrecht Case." Journal of Economic Perspectives, 35 (2): 171–90. DOI: 10.1257/jep.35.2.171Additional Materials
JEL Classification
- D73 Bureaucracy; Administrative Processes in Public Organizations; Corruption
- H54 National Government Expenditures and Related Policies: Infrastructures; Other Public Investment and Capital Stock
- K42 Illegal Behavior and the Enforcement of Law
- L74 Construction
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
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