The anticorruption community owes the American Economic Association and Nicolás Campos, Eduardo Engel, Ronald D. Fischer, and Alexander Galetovic a debt of gratitude. The AEA for publishing their article “The Ways of Corruption in Infrastructure: Lessons from the Odebrecht Case” and making it available free to non-members (here). The four Chilean scholars for showing how much can be learned when a command of the literature on corruption is coupled with a careful, painstaking study of a single case.
In 2016, the Brazilian engineering and construction company Odebrecht admitted in a settlement with American, Brazilian, and Swiss authorities (here) to bribing 600 officials in 12 states either to secure contracts to build roads, powerplants, and other large infrastructure projects or to agree to raise the contract price during construction of the project. Information the authors pieced together from the settlement documents show the company grossed $3.3 billion in profits from paying $788 million in bribes. These numbers confirm the obvious: the returns from infrastructure corruption are enormous, and significant resources should be devoted to preventing it.
Digging deeper into the massive amount of paper the several prosecutions of Odebrecht and its executives have generated, the authors report other findings that are not so obvious.Continue reading