What is Crony Capitalism and meaning | Crony Capitalism Index

 

There are many economic systems in the world like capitalism, communism, socialism and the mixed economy. All these systems have four factors of production; Land, labour, capital and entrepreneurs work. The fourth factor of production, ie the entrepreneur, is responsible for many industrial revolutions in the world. The success of an entrepreneur depends to a large extent on the political support of the government of the country concerned. As we are making more economic and technological development, income inequality is increasing day by day mainly because of a strong nexus between politicians and entrepreneurs. This nexus is called crony capitalism.

 

What is the meaning of crony capitalism?

 

According to the Oxford Dictionary, crony literally means' a close friend or companion. The word is derived from the Greek word 'Khronos' which means 'long-lasting'. Crony capitalism refers to an economy in which the success of a business depends not on market movements but on the nexus between the political class and the business class. In this, the government makes policies that benefit a particular class and this profit-making class also keeps transferring some benefits to the government. The success of a business depends on the government granting government grants, poor tax structure, tendering to the people of its choice, formulating policies for the interests of the merchant class, preventing competition, preventing entry of new farms, and so on. Business cooperation is included.

 

Crony Capitalism Index

 

This index calculates how many economic activities occur in a country's industries that are affected by chronism? Germany was the cleanest country in the Crony Capitalism Index, released in 2014, where only one trader of the country brought his wealth from the Cronian regions. On the other hand, Russia was ranked among the worst countries, where 18% of the country's wealth came from the crony regions of the country. India was ranked 9th in this crony-capitalism index, where 3.4% of the country's GDP came from the chronism sector. In the Crony Capitalism Index report released in 2016, Russia was in the worst condition, after which Malaysia was ranked second, the Philippines ranked third and Singapore fourth.

 

The result of this crony-capitalism is that rich people and rich and poor people are becoming poorer in India and the world. Hence, it can be concluded that due to crony capitalism the total wealth of the country and the world is being concentrated in the hands of only a few rich people and a large part of the 7.5 crore population is still forced to go to sleep hungry.

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