Taiwan was listed in 10th place on The Economist’s second index of crony capitalism, which gives an indication of how much the livelihood of people in certain nations or cities depends on close relationships between businesspeople and government officials.
The index is compiled with the use of data such as a nation’s total wealth in comparison with its GDP, the Forbes rankings of its billionaires and the source of their wealth.
In this year’s rankings, 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 nations where cronyism is a problem.
Taiwan’s score has improved, down three places from its ranking in the 2014 index. Its crony wealth was assessed as 3.2 percent of its GDP, compared with 5.5 percent in 2014.
The higher the ratio, the more likely it is that the economy is suffering from a severe case of crony capitalism, the magazine said.
In its report on the new index, published on Saturday, The Economist said developing economies accounted for 43 percent of global GDP, but 65 percent of crony wealth.
Among the big nations, 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, the magazine said.
Russia’s percentage of crony wealth in proportion to its GDP was estimated at 18 percent.
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 11th, although in absolute terms it has the biggest concentration of crony wealth in the world, at US$360 billion, the magazine said.
However, once China’s wealth was compared with its GDP, its listing came in “only 11th on our ranking of countries,” the magazine 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 London-based magazine said, adding that the term means the owners of a unit 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,” the magazine said. “Industries that are vulnerable often involve a lot of interaction with the state, or are licensed by it.”
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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