Corruption has weakened public support for democratic institutions in many countries as well as for economic reforms by undermining the legitimacy and support necessary for governments to implement often unpopular austerity reform measures. Corruption has deep historical roots in Brazil and other developing countries. Such statism does not provide for participation of citizens in the decision-making process and, according to Dr. Douglass North, there are high transaction costs associated with such closed political and economic institutions. In two of the three studies undertaken a sound set of policy recommendations helped to stimulate policy reform. Only in the new regulatory regime governing privatization did the empirical data prove too scant to justify recommendations.
Government procurement is notoriously susceptible to corruption.
If there is a lack of transparency and accountability in bidding on government contracts, corruption can easily take root in the process. The result is higher cost of doing business, which generally translates into higher prices to the consumer and eventually lower income for government to pay for social services that benefit the public. Shedding Light on Procurement A procurement study prepared by the ILRJ examined international experience regarding government purchases and looked at Brazil's own legislation. Its evaluation of Brazil's existing rules underscored the cost of lack of transparency and competition. The study's detailed and substantive empirical data strongly supported specific policy recommendations and changes in Brazil's laws.