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

Abstract

When firms give money to candidates for public office, what return can they expect on their investment? Prior studies have been inconclusive, due to both methodological challenges and unique features of the U.S. political context on which they have focused. Using data from Brazil, we employ 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 contracts—at least 14 times the value of their contributions—when they donate to a federal deputy candidate from the ruling Workers’ Party (PT) and that candidate wins office. We find no effects among allied parties, indicating that the PT prioritizes this form of state spending for party strengthening rather than coalition management.