Malaysia ranked third in The Economist's crony-capitalism index

 

Malaysia has been ranked third out of 43 countries in the 2023 crony-capitalism index recently published by reputed financial publication, The Economist.

Malaysia comes in behind Russia and the Czech Republic with Singapore and Mexico rounding out the top five. Indonesia and Thailand are also among the top 10.

The British-based weekly magazine calculated the index based on whether the livelihoods of people from 43 capitalist economies with a GDP of over US$250 billion (about RM1.1 trillion) are easily affected by crony capitalism.

The Economist used data from Forbes's annual list of the world’s wealthiest people to estimate how much they profit from rent-seeking industries that benefit from state favouritism.

Forbes listed 2,640 billionaires with a total worth of US$12 trillion, but most do not operate in rent-seeking sectors.

The Economist then classifies the sources of wealth into rent-seeking and non-rent-seeking sectors.

"Crony capitalists’ wealth has risen from US$315 billion, or one percent of global GDP 25 years ago, to US$3 trillion or nearly three percent of global GDP now. Some 65 percent of the increase has come from America, China, India and Russia.

"Overall, 40 percent of crony-capitalist wealth derives from autocratic countries and amounts to nine percent 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," said The Economist.

The Economist also quoted the late Polish sociologist Stanislav Andreski who warned that if elites so enrich themselves that they impoverish a country, a “kleptocracy” is formed.