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 not an internationally recognized index due to its limitations.

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.

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. 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.

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. 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.

The 2016 index was published on May 7, 2016.

The results of the crony-capitalist Index of 23 countries were published in 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.Developing countries in general having a relatively higher Crony-Capitalism index than developed countries.

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