At least it’s in the right direction: Ukraine has dropped from third place to fifth place on The Economist’s ranking of crony capitalism.
The crony-capitalism index, released as part of the weekly magazine’s May 5 issue, lists world economies by wealth of billionaires from so-called “crony industries” as a percentage of the country’s overall GDP.
In 2014, when the magazine last released its index, Ukraine came in third place on the ranking, behind Malaysia and Russia.
Now, in the 2016 ranking, Ukraine finds itself in fifth place. Russia is now in first place, followed by Malaysia, the Philippines, and Singapore.
The Economist composed the index by consulting Forbes’s list of the world’s billionaires. The magazine then labelled each billionaire a “crony” or not depending on how they earned their fortune.
Billionaires who became wealthy in industries dominated by cronyism would be marked as cronies. The industries that the magazine chose are areas where rent-seeking schemes are more likely to occur – banking, defense sector, casinos, infrastructure, construction, telecoms, utilities and resource extraction all feature in the index.
From there, the magazine aggregated the amount of money each billionaire is reported to possess, and then ranked it against the total size of the country’s GDP.
“We aggregate the billionaires by their home country and express the total wealth as percentage of GDP,” the magazine wrote, describing the system by which it determined the ranking.
In Ukraine’s case, The Economist calculated the country’s overall billionaire wealth as 7.8 percent of the country’s total GDP of $177 billion. Out of that billionaire wealth, The Economist determined that 85 percent of it belonged to the “crony sector,” or 6.7 percent of the country’s total GDP.
According to The Economist’s calculations, then, roughly $12 billion of the Ukrainian economy’s GDP exists in the “crony sector,” and belongs to billionaires who made their fortunes in industries susceptible to cronyism.
It is unclear if Ukraine’s drop on the list is directly attributable to any internal movement against corruption, or if the country’s broader economic decline has cut into the crony capitalist’s share.
