The crony-capitalism index is an index published by the British newspaper ''

The Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econo ...

'' that claims to calculate whether the livelihood of the people from a certain country or city with a capitalist economy is "easily affected by

crony capitalism Crony capitalism, sometimes called cronyism, is an economic system in which businesses thrive not as a result of free enterprise, but rather as a return on money amassed through collusion between a business class and the political class. This is ...

". It is a measurement of crony capitalism designed based on the work by Ruchir Sharma of

Morgan Stanley Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...

Investment Management, Aditi Gandhi and Michael Walton of Indian

think-tank A think tank, or policy institute, is a research institute that performs research and advocacy concerning topics such as social policy, political strategy, economics, military, technology, and culture. Most think tanks are non-governmental org ...

Centre for Policy Research The Centre for Policy Research (CPR) is an Indian think tank focusing on public policy. Established in 1973 and located in New Delhi, it is one of the national social science research institutes recognized by the Indian Council of Social Scie ...

, and others" in 2014.

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 A business magnate, also known as a tycoon, is a person who has achieved immense wealth through the ownership of multiple lines of enterprise. The term characteristically refers to a powerful entrepreneur or investor who controls, through perso ...

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. 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 A monopoly (from Greek language, Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situati ...

or require licensing or highly depend on the government have been selected: casinos; coal,

palm oil Palm oil is an edible vegetable oil derived from the mesocarp (reddish pulp) of the fruit of the oil palms. The oil is used in food manufacturing, in beauty products, and as biofuel. Palm oil accounted for about 33% of global oils produced from ...

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 ''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...

'' will be calculated. 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

Result

2023

The 2023 index was published on 2 May 2023. Russia, by far, was the highest, with billionaire wealth from crony sectors amounting to 19% of its GDP. China recorded significant decreases in crony wealth, with total billionaire wealth from crony sectors decreasing from nearly half in 2010 to around a quarter in 2023.

2021

The 2021 index featured, Russia, Malaysia and Singapore as the top three crony-capitalism countries. Russia topped the list with 70% of the 120 billionaires holding 80% of billionaire wealth.

2016

The 2016 index was published on May 7, 2016. India is ranked in ninth position in crony-capitalism with crony sector wealth accounting for 3.4 per cent of the gross domestic product (GDP), according to a 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.

2014

The results of the crony-capitalist Index of 23 countries were published on March 15, 2014. The five largest developed countries, ten largest developing countries and eight other countries where cronyism was thought to be a big problem being included. Countries not located in the Global North has a relatively higher Crony-Capitalism index than those not in it.

Criticism

The index has been criticized as being a misnomer, as it does not actually calculate the full situation as to what constitutes as crony capitalism, by leaving out crucial sectors or situations such as South Korea's

chaebols A chaebol (, ; ) is a large industrial South Korean conglomerate run and controlled by an individual or family. A chaebol often consists of multiple diversified affiliates, controlled by a person or group whose power over the group often exc ...

, Japan's zaibatsu, or

lobbying In politics, lobbying, persuasion or interest representation is the act of lawfully attempting to influence the actions, policies, or decisions of government officials, most often legislators or members of regulatory agency, regulatory agencie ...

by American companies to the

United States Congress The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...

such as

Google Google LLC () is an American multinational technology company focusing on search engine technology, online advertising, cloud computing, computer software, quantum computing, e-commerce, artificial intelligence, and consumer electronics. ...

Facebook Facebook is an online social media and social networking service owned by American company Meta Platforms. Founded in 2004 by Mark Zuckerberg with fellow Harvard College students and roommates Eduardo Saverin, Andrew McCollum, Dustin M ...

and

Apple An apple is an edible fruit produced by an apple tree (''Malus domestica''). Apple fruit tree, trees are agriculture, cultivated worldwide and are the most widely grown species in the genus ''Malus''. The tree originated in Central Asia, wh ...

in return for favorable policies and tax schemes, among others.

Concealing fortunes

According to ''

Bloomberg Businessweek ''Bloomberg Businessweek'', previously known as ''BusinessWeek'', is an American weekly business magazine published fifty times a year. Since 2009, the magazine is owned by New York City-based Bloomberg L.P. The magazine debuted in New York City ...

'', the phenomenon of concealing fortunes is common for cronies, especially in

China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...

. 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. The fact that the cronies are not willing to announce their wealth publicly has affected the accuracy of the index.

Rough categorization

The index has also been criticized for only roughly categorizing the industrial sectors with neglected critical instances of cronyism.

Limited data for cronyism

The index has only counted the wealth of billionaires which contributed to the omission of extensive data. Due to the lack of data, or the data not being publicly available, numerous particular industries in various countries are not identified as "crony heavy", leading to perceived lower crony capitalism even though it may be on the contrary. A group of cronies can also possibly be enriched by plenty of rent-seeking while not wealthy enough to achieve the cut-off. As a result, such groups were not examined in the index.

References

{{reflist, 2

External links

CPI
(

Corruption Perceptions Index The Corruption Perceptions Index (CPI) is an index which ranks countries "by their perceived levels of public sector corruption, as determined by expert assessments and opinion surveys." The CPI generally defines corruption as an "abuse of entru ...

)
The new age of crony capitalism
Capitalism Political corruption Political terminology