Crony Capitalism in Ukraine : Relationship between Political Connectedness and Firms' Performance

Balabushko, Oleksii ; Betliy, Oleksandra ; Movchan, Veronika ; Piontkivsky, Ruslan ; Ryzhenkov, Mykola

World Bank, Washington, DC

关键词: POLITICAL NETWORKS;    CORRUPTION;    FIRM PERFORMANCE;    CRIME;    RENT SEEKING;   

DOI  :  10.1596/1813-9450-8471
RP-ID  :  WPS8471

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This study combines firm-level data anddata on politically exposed people to explore correlationbetween firms' political connectedness and theireconomic performance in Ukraine. First, it estimates theshare of politically connected firms in Ukraine'seconomy. Second, the study looks at how different theperformance of politically connected firms is from that oftheir nonconnected peers. The analysis finds that 2 percentof firms are politically connected, but they control over 20percent of the total turnover and over 25 percent of theassets of all Ukrainian companies. Over the past twodecades, politically connected firms used various channelsto access economic rents: public procurement, subsidizedloans, transfers from the budget, trade regulations thatrestrict imports, privileged access to state assets throughprivatizations, and beneficial tax regimes. There is astrong negative correlation between political connection andproductivity. Politically connected firms are larger andemploy more people, but they are less productive and growslower in turnover and job creation. This may likely accountfor lower economic growth and less competitive economy.