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Taiwan ranks 10th among 22 counties in crony capitalism index
【Economics】2016-05-08  15:24:00
Taipei, May 8 (CNA) Taiwan was listed in 10th place on the Economist's latest index of crony capitalism, which gives an indication of how much the livelihood of people in certain countries or cities depends on close relationships between business people and government officials.

The index is compiled with the use of data such as a country's total wealth in comparison to its gross domestic product (GDP), the Forbes rankings of its billionaires, and the source of their wealth.

In its rankings this year, the Economist listed 22 economies that it described as the five richest ones, the 10 biggest emerging ones for which it had reliable data, and a selection of other countries where cronyism is a problem.

Taiwan was listed at 10th, a drop of three notches from the previous rankings in 2014, indicating that it had scored better on this year's index of crony capitalism.

This year, Taiwan's crony wealth was assessed as 3.2 percent of its GDP, compared with 5.5 percent in 2014, according to the London-based weekly newspaper.

The higher the ratio, the more likely it is that the economy is suffering from a severe case of crony capitalism, the newspaper had said as publishing its crony-capitalism index in 2014.

In its report of the 2016 index, published May 7, the newspaper said developing economies accounted for 43 percent of global GDP but 65 percent of crony wealth.

Among the big countries, it said, Russia still scored the worst, in reflection of its "corruption and dependence on natural resources," and was moved to the top of the list from No. 2 in 2014.

Russia's percentage of crony wealth in proportion to its GDP was estimated at 18 percent this year.

It was followed by Malaysia (13 percent), the Philippines (11.3 percent), Singapore (10.7 percent), and Ukraine (6.7 percent).

China (including Hong Kong) was ranked at 11th, although in absolute terms it now has the biggest concentration of crony wealth in the world, at US$360 billion, the newspaper said.

Once China's wealth was compared with its GDP, however, its listing came in "only 11th on our ranking of countries," the newspaper said. "Were all billionaire wealth in China to be classified as rent-seeking, it would take 5th spot in the ranking."

"Rent-seeking can involve corruption, but very often it is legal," the newspaper said.

It explained the term as meaning when the owners of an input of production -- land, labor, machines or capital - extract more profit than they would get in a competitive market.

"Cartels, monopolies and lobbying are common ways to extract rents," it said. "Industries that are vulnerable often involve a lot of interaction with the state, or are licensed by it: for example telecoms, natural resources, real estate, construction and defence."

(By Kuay Chau-churh and Elizabeth Hsu)
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