How do institutions foster corruption? How does the unveiling of corruption scandals affect institutional reform? This essay takes the Brazilian budget process from 1988 onwards as a case study in an attempt to answer both these questions. In this period, two corruption scandals in the budget process were uncovered: the "budget dwarves" in 1993-1994 and "budget leeches" in 2006. The first scandal is a classic example of how institutional centralization, coupled with informality, results in corruption; the second scandal illustrates how corrupt actors work within a partially decentralized institutional scenario. Both scandals resulted in partial, and somewhat effective, institutional reforms.
budget process; corruption; institutional change; legislative organization
