The Economist recently published its annual Crony-Capitalism Index and the 2023 edition doesn’t make good reading for us Malaysians.
This is because our country ranks third on the list, only behind Russia and the Czech Republic as the most crony-capitalist country in the world!
Crony capitalism can be defined as an economic system where businesses thrive on a return on money amassed through collusion between a business class and the political class.
According to the study, crony capitalists’ wealth across the globe has risen from approximately RM1.4 trillion or 1% of the global GDP 25 years ago to RM13.3 trillion or around 3% of the global GDP this year.
Moreover, the study estimated that there are hundreds of billionaires around the world who make their riches from sectors which “often feature chummy dealings with the state”.
The Economist classifies the source of wealth of the world’s billionaires into rent-seeking and non-rent-seeking sectors, with an economic rent defined as the surplus remaining once capital and labour have been paid.
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The publication further elaborated that rent-seeking is common in sectors close to the government such as banking, construction, property and natural resources.
Accordingly, it’s sometimes possible for rent-seekers to inflate their earnings by gaining favourable access to land, licences and resources due to their “close relationship” with the government.
Russia is ranked the most crony-capitalist nation in the index, with its billionaires’ wealth from crony sectors amounting to 19% of the GDP, while the Czech Republic placed second with 15% of the same metric.
Malaysia ranks third in the list, with our billionaires’ wealth making up to 12% of our country’s GDP, up to 11% of which is from the crony sectors.
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Besides that, the Economist also made reference to the United States Agency for International Development’s (USAID) 84-page ‘dekleptification’ guide published last year which studied 13 countries infamous for kleptocratic practices, including Malaysia.
Among the recommendations from the USAID guide in the fight against kleptocracy include breaking up corrupt monopolies and digitising ownership registries.
Do note that only 43 countries were ranked in the 2023 Crony Capitalism Index, as it only includes nations with more than approximately RM1.11 trillion GDP as part of its study.
So, what do you guys think of the findings of the study? What do you think the government should do to improve our country’s ranking? Share your thoughts with us in the comments!
