Source: First Edition - POLICY - 10/05/2010

Corruption costs Brazil at least R $ 41,5 billion per year, or 1,38% of GDP. This loss results from the direct diversion of public funds and also from loss of investment efficiency, distortions in competition and lack of security for the projects. The conclusion is from the report “Corruption: economic costs and proposals for combat”, of the Federation of Industries of the State of São Paulo (Fiesp).

The calculation was made from comparisons in a group of 95 nations. The study found a very strong relationship between a society's distrust of how its government takes care of public funds (in Brazil, this distrust is very high) and the country's poor performance in other very objective indicators directly related to economic productivity, such as efficiency government administration, law enforcement, risk to investors and economic competitiveness in relation to other nations. The result is that if corruption, or the perception of corruption, in Brazil were reduced to a level similar to that of the United States (still very far from the utopian level of “zero corruption”), R $ 41,5 billion per year would be placed for work in favor of society (read more about this in the cover story of issue 625 of ÉPOCA, of May 10).

Citizens' distrust was measured by the Corruption Perception Index (IPC), surveyed annually by the NGO Transparency International. Brazil's CPI has been improving, but remains poor in absolute terms. The higher the score, the better the situation: our score in 2009 was 3,7, below other countries with a comparable level of development, such as Turkey (4,3) South Africa (4,7), Portugal (5,8) and Chile (6,7). The USA has 7,5. In the restricted group of countries with scores above 9,0, Denmark, Sweden and New Zealand appear. Among the countries with worse scores than Brazil are China, Russia, Argentina, Venezuela and Mexico. There are cases of countries that have a strong perception of corruption and are growing rapidly, but the analysis of the group of countries has shown that corruption has destructive effects on wealth creation. “We are not talking about reaching a zero level of corruption. We are talking about possible, very objective changes ”, says José Ricardo Roriz, Director of Competitiveness at Fiesp. "This involves more prevention to prevent corruption from occurring, control of the public administration and punishment when corruption is found."

The Fiesp study points to two major sets of reforms that could reduce corruption in Brazil: economic reforms and institutional reforms. Are the following:

Economic changes

Tax reform, including more purchases made electronically, in order to improve control over public bids and spending and inhibit kickbacks;

Tax reform, to make the tax system clearer and simpler and to avoid casuistic changes, which make business less predictable and concentrate power on bureaucrats;

Microeconomic reform, which would strengthen regulatory agencies and the participation of civil society in the control of public accounts.

Institutional changes

Political reform, in order to adapt the representation in Congress and make the financing of election campaigns more transparent;

Reform of the Judiciary, in order to speed up proceedings and / or reduce the time for appeals in cases of finding corruption;

Administrative reform, to reduce the Executive's power to appoint political allies to occupy public office, to the detriment of career technicians and employees. The Executive Branch can appoint in Brazil more than 20 thousand positions, against less than a thousand in the United States and only 500 in France. This distortion concentrates power in the current ruler and creates opportunities for corruption. “In countries with a low perception of corruption, the government changes only the leadership positions, the key posts, but keeps the occupants of most of the administrative machinery”, says Roriz, from Fiesp.