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The 2023 crony-capitalism index

The Economist [no fee link]: “Over the past 20 years, Britain’s capital was so welcoming to oligarchs that it became known as “Londongrad”. Many bought mansions from Highgate to Hyde Park; a couple bought into football clubs. After Russia invaded Ukraine in February last year, 48 oligarchs were placed under Western sanctions. The immense wealth of many of Vladimir Putin’s associates highlights the problem of crony capitalism and why more should be done to combat it. According to the latest instalment of our crony-capitalism index, which first estimated how much plutocrats profit from rent-seeking industries almost a decade ago, crony capitalists’ wealth has risen from $315bn, or 1% of global gdp, 25 years ago to $3trn or nearly 3% of global gdp now (see chart 1). Some 65% of the increase has come from America, China, India and Russia. Overall 40% of crony-capitalist wealth derives from autocratic countries and amounts to 9% of their gdp. There are hundreds of billionaires around the world whose riches are largely believed to derive from sectors which often feature chummy dealings with the state…We classify the source of wealth into rent-seeking and non-rent-seeking sectors. An economic rent is the surplus remaining once capital and labour have been paid which, with perfect competition, tends towards zero. Rent-seeking is common in sectors close to the state, including banking, construction, property and natural resources. It can sometimes be possible for rent-seekers to inflate their earnings by gaining favourable access to land, licences and resources. They may form cartels to limit competition or lobby the government for cosy regulations. They may bend rules, but do not typically break them…”

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