Activist supporting the  anti-corruption operation demonstrate against former president Luiz Inacio Lula da Silva Heuler Andrey/Getty Images

Brazil’s Economic Deliverance

Brazil's proliferating corruption scandals have imposed substantial costs on some of the country's largest companies. But, in the long term, today's efforts to strengthen the rule of law and ensure fair market competition will prove to have been well worth it.

WASHINGTON, DC – Ongoing corruption investigations in Brazil have exposed a tangled network of illicit relationships between private firms, government bureaucrats, and elected politicians. The corruption scandals have already reached the highest levels of Brazilian society. Several high-level politicians and corporate owners and executives have been convicted and imprisoned. Even former President Luiz Inácio Lula da Silva is now under indictment.

Meanwhile, the drama has taken its toll on the Brazilian economy. In addition to individual businesses, entire value chains that contribute heavily to the country’s GDP have suffered a sudden operational and financial freeze.

But while many observers have focused on the scandals’ short-term political and economic fallout, it is worth remembering what Brazil stands to gain by exposing corruption and punishing offenders. Reforming the relationship between Brazil’s public and private sectors can improve the country’s long-term economic performance.