The Spoils of Victory: Campaign Donations and Government Contracts in Brazil

When firms give money to candidates for public office, what return can they expect on their investment? The answer may depend on the party in power, and whether it rewards longstanding contributors, pays back all donors on equal terms, or refuses to be swayed by corporate money. In this analysis of Brazil, we use a regression discontinuity design to identify the effect of an electoral victory on government contracts for a candidate’s corporate donors. Firms specializing in public works projects can expect a substantial boost in government contracts— at least 8.5 times the value of their contributions—when a recipient of campaign donations from the ruling Workers’ Party (PT) wins office. We find no effect among allied parties, suggesting that the PT uses pork to favor its members rather than to maintain a governing coalition. The profile of public works donors to major parties suggests that under the PT’s stewardship, smaller firms have been able to break into the traditionally oligopolistic donations-for-contracts market because, prior to governing, the party had few relationships with established players.