Curbing Corruption? The Efficacy of the Foreign Corrupt Practices Act

Abstract

Corruption of public officials, in particular bribery, has long been recognized as a potentially serious problem in every polity. Large foreign corporations, based in developed jurisdictions, are identified as common culprits. The first legislation in the world to recognize and seek to curb the contribution of domestically based corporations to foreign corruption was the U.S. 1977 Foreign Corrupt Practices Act. The Act criminalizes the payment of bribes to foreign officials for the purpose of obtaining or retaining business. I analyze the efficacy of the Act, and argue that it has had only limited success in curbing foreign bribery. This article contributes to the existing literature by considering what impact recent domestic and international developments will have on the Act’s likely future effectiveness. Specifically, it suggests that the internationalization of anti-corruption efforts and recent increased and expanded domestic enforcement reduce the potential costs to business competitiveness and add new momentum to the Act’s effectiveness. The ultimate impact of these developments will depend on the ongoing commitment of all parties to curb supply-side corruption.