Crony-capitalism index

The crony-capitalism index aims to indicate whether the livelihood of the people from certain country or city with a capitalist economy are easily affected by crony capitalism. It is a new measurement of crony capitalism designed by The Economist newspaper based on the "work by Ruchir Sharma of Morgan Stanley Investment Management, Aditi Gandhi and Michael Walton oew Delhi's Centre for Policy Research, and others" in 2014.[1]

Aims

The index aims to be a measuring trend in the number of economic rent-seekers. The assumption behind is because of the favorable political policies set by the government officials, the tycoons are increasing their wealth and interest. As a result, they get a larger part of people's fruits of labor, instead of generating more wealth for the whole society.[2] In some extreme cases, some favored suppliers are influential on the establishment and application of the business-impacting laws and citizens pay the tax for purchasing the overpriced products supplied by the favored corporations.

Methodology

Ten of the industries that are susceptible to monopoly or require licensing or highly depend on the government have been selected: casinos; coal, palm oil and timber; defense; deposit-taking banking and investment banking; infrastructure and pipelines; ports; airports; real estate and construction; steel and other metals; mining and commodities; utilities and telecoms services. Then, the total wealth of world's billionaires who actively involve in rent-heavy industries from the data of Forbes will be calculated.[3] Results can be achieved from the ratio of billionaire wealth to GDP in their own countries; higher ratio of billionaire wealth to GDP indicates higher possibility of suffering from crony capitalism.

Result
This list is incomplete; you can help by adding missing items with reliable sources.

2016

The 2016 index was published on May 7, 2016.[4]

2014

The results of the crony-capitalist Index of 23 countries were published on March 15, 2014.[1] The five largest developed countries, ten largest developing countries and eight other countries where cronyism was thought to be a big problem being included.[5] Developing countries in general having a relatively higher Crony-Capitalism index than developed countries.

RankCountry
1Hong Kong
2Russia
3Malaysia
4Ukraine
5Singapore
6Philippines
7Mexico
8Taiwan
9India
10Indonesia
11Argentina
12South Africa
13Brazil
14Turkey
15United Kingdom
16Thailand
17United States
18Poland
19China
20France
21Japan
22South Korea
23Germany
Source [1]

Limitations

Concealing fortunes

The phenomenon of concealing fortunes is common for cronies, especially in China.[6] It has been revealed that some of the powerful politicians have disguised their properties by transferring it under the names of their friends and family members. Unreliable property records are also believed to be the obstacles of determining an individual's actual wealth.[7] The fact that the cronies are not willing to announce their wealth publicly has affected the accuracy of the index.[8]

Rough categorization

The Economist roughly categorizes the industrial sectors with neglected critical instances of cronyism.[9]

Limited data of crony

The index has only counted the wealth of billionaires which contributed to the omission of extensive data. Due to the lack of data, particular industries in a certain country cannot be exactly identified as "crony heavy". A group of cronies can also possibly be enriched by plenty of rent-seeking while not wealthy enough to achieve the cut-off.[10] Therefore, this group will not be examined in the index. The index is only a crude guide to the concentration of wealth in opaque industries compared with more competitive ones.

See also

References
  1. The Economist (2014). "Our crony-capitalism index: Planet Plutocrat". The Economist. Retrieved 20 March 2014.
  2. Howard Inn (2014). "More pragmatism needed over Hong Kong's land policy". South China Morning Post. Retrieved 24 March 2014.
  3. Forbes (2014). "The World's Billionaires". Forbes. Retrieved 28 March 2014.
  4. The party winds down.India is ranked at ninth position in crony-capitalism with crony sector wealth accounting for 3.4 per cent of the gross domestic product (GDP), according to a new study by The Economist. In India, the non-crony sector wealth amounts to 8.3 per cent of the GDP, as per the latest crony-capitalism index. In 2014 ranking also, India stood at the ninth place. Using data from a list of the world's billionaires and their worth published by Forbes, each individual .. Read more at: http://economictimes.indiatimes.com/articleshow/52175285.cms The Economist. May 7, 2016.
  5. Transparency International (2011). "Bribe Payers Index: In detail". Transparency International. Transparency International. Retrieved 24 March 2014.
  6. Dexter Roberts (2011). "China's Elite Wealth in Offshore Tax Havens, Leaked Files Show". BloombergBusinessweek. Retrieved 30 March 2014.
  7. Nina L. Khrushcheva (2013). "Putin the Perónist". Project Syndicate. Retrieved 30 March 2014.
  8. Eden Schiffmann (2014). "The Economist's Crony Capitalism Index Does Not Measure Crony Capitalism". The Global Anticorruption Blog. Retrieved 30 March 2014.
  9. Peter Schweizer (2013). "Politicians' Extortion Racket". The New York Times. Retrieved 1 April 2014.
  10. The Economist (2014). "Fighting corruption in India: A bad boom". The Economist. Retrieved 29 March 2014.
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