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Crony Capitalism In Brazil

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Political stability is best defined as the durability and integrity of a current government regime. Many countries in contemporary society make the transition towards democracy with the intention to become more politically stable in order to conduct their affairs. This trend of democratization often does result in lesser tension between government and those being governed. However, political unrest is still frequently experienced in some countries that have successfully established a democratic regime, while the same is virtually nonexistent in others. For that reason, political instability and its causes is often a controversial topic generally discussed by social scientists and scholars. While many factors have influence on the likelihood …show more content…

This definition accurately describes the interaction between firms and government in Brazil, and while many disapprove of such practices, minimal effort is made to effectively cleanse Brazilian politics of corruption. Brazil’s current economic and political crisis is the best example as to why crony capitalism may lead to political instability. The Petrobras scandal, the largest corruption case in Brazil’s history, involves and implicates dozens of Brazilian politicians, including members of the house, senate, and the former president Luiz Inacio “Lula” da Silva. Nobody knows who came up with the scheme but it was developed during the commodities boom of the 2000s, when oil prices were high, and involved leaders of the state-run oil company (Petrobras), top executives at Brazil's major construction companies, and Brazilian politicians. The arrangement worked in four steps, explains Beauchamp writing for Vox: “first construction executives secretly created a cartel to coordinate bids on Petrobras contracts and systematically overcharge the company, then a select group of Petrobras employees turned a blind eye, allowing the construction companies to charge Petrobras outrageous sums, after, the construction executives pocketed the proceeds from these inflated contracts and rewarded their partners inside Petrobras with big bribes, and finally some of the proceeds also got sent to friendly politicians, as either personal gifts or donations to their campaigns. Because Petrobras is partially owned by the state, politicians can install people as executives — who then turn around and reward that politician with a bribe” (Beauchamp). All in all, somewhere around 5.3 billion dollars were illegally obstructed in this plan. Although Brazil’s president at the time, Dilma Rouseff, was not personally implicated

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