Crony capitalism

Arvind K. Jain ()

Chapter 3 in Understanding Political Corruption, 2025, pp 34-56 from Edward Elgar Publishing

Abstract: Crony capitalism refers to a system in which those close to the political elite receive favors that possess economic value. These favors might include access to resources at less than market prices, regulations that protect a firm's markets from competition, or relief from certain regulatory restrictions. Such favors are not a sign of crony capitalism if they are motivated by a desire to increase public welfare while they simultaneously increase returns for private investors. In a crony capitalist system, such favors are motivated by accompanying compensation for the political elite rather than by a desire to increase public welfare. Many studies find evidence that private investors develop political connections that create value for them at a cost to the public. These studies confirm the existence of crony capitalism in some situations.

Keywords: Crony capitalism; Political connections; Policy preferences; Regulatory capture (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035325092
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