Russia takes the top spot for its percentage of billionaires’ wealth coming from crony capitalism, according to data compiled by The Economist on 5 May 2016. Following close behind in second place is Malaysia. Singapore appears as well, as the fourth country on the list.
The crony-capitalism index by The Economist ranks countries according to the percentage of country’s billionaires who have accumulated wealth from cronyism. A total of 22 countries were compared in the study.
For chart topper Russia, billionaire wealth accounts for 21.3% of the country’s GDP and 18.0% of the GDP is wealth stemming from the crony sector. In Malaysia, while billionaire wealth as a percentage of its GDP is significantly lower than Russia at 13.3%, crony sector wealth accounts for 13% of its GDP.
Singapore is ranked the fourth country with the most crony capitalism, following Philippines in the third place. 14.8% of Singapore’s GDP stems from billionaire wealth. 10.7% stems from wealth by cronyism.
Of all 22 countries in the study, the cleanest country with the least cronyism is Germany, with crony sector wealth accounting for a mere 0.2% of the country’s GDP.
The Economist notes that “worldwide, the worth of billionaires in crony industries soared by 385% between 2004 and 2014, to $2 trillion” and predicts that should energy and commodity prices rise, so will the wealth of crony capitalists.
It further notes in its editorial that developing economies account for 43% of global GDP but 65% of crony wealth.
“Of the big countries Russia still scores worst, reflecting its corruption and dependence on natural resources. Both its crony wealth and GDP have fallen in dollar terms in the past two years, reflecting the rouble’s collapse. Their ratio is not much changed since 2014. Ukraine and Malaysia continue to score badly on the index, too. In both cases cronyism has led to political instability.”
Explaining why Singapore is ranked so poorly in the crony index, “Try to pay a backhander to an official in Singapore and you are likely to get arrested. But the city state scores poorly because of its role as an entrepot for racier neighbours, and its property and banking clans.”