Crony Sectors as a Barrier to Economic Well-Being and Ecologization (Case of Ukraine).
Loading...
Date
Journal Title
Journal ISSN
Volume Title
Publisher
Economics and Sociology, 2018, 11(3), 113-132.
Abstract
This paper investigates the relationship between oligarchic economies and the crony sector development, which includes industries with the dominating rent-seeking behavior. In order to analyze the period from 2006 till 2016, cross-countries’ data on the Power Distance Index, Crony Capitalism Index, Sustainable Society Index, among with the environmentally related taxes are referenced. Regression analysis for the distance to power and dependence on crony capitalism is carried out with a focus on the relation between crony capitalism and ecologization. Existence of a vicious cycle associated with hierarchical tolerance and barriers towards ecologization in modern welfare economics, is debated. Conclusions are made concerning the cultural and social factors having their direct impact on the existence of crony sectors and functioning of weak institutions.
Description
The development of technologies enables new forms of organizational interactions that do not require rigid hierarchies. That is why oligarchic structures often hinder technological progress and ecologization, since the latter “wipes out” the social and electoral basis needed for their self-reproduction. That is why blocking free entrepreneurship, risk-oriented technologies,ecologization, low taxation of creative sectors, and cultivating a bad business climate are becoming the dominant instruments of the state economic policy controlled by the oligarchical clans. Overcoming cultural constraints beyond the tolerance of hierarchies that reproduce oligarchism may not be successful if the focus is on opposing technological progress and distance to power. Most important will be the creation of conditions for alternative forms of social interactions and business organizational modalities that are generated by a combination of access to new technologies and market self-regulation. The main instruments of economic policy should be inclusive access to knowledge, minimizing barriers to entrepreneurship, improving institutional quality and lowering the tax rates (especially for ecological products).Cultural factors have a direct correlation to the economy, especially in increasing the probability of crony-sector domination. Together with the lack of democratic control and weak institutions, they result in economic oligarchization. A direct link between PDI and the cronycapitalism index is confirmed empirically. Also, an indirect link between environmental tax revenues and the crony-capitalism index is confirmed. The value of tolerance to hierarchy is significant while explaining the institutional trajectory of country’s development. In the case where crony sectors are hampering technological progress and inclusive growth, structural reforms can be complicated due to the lack of public request to overcome hierarchies. The rigor
of such a system limits development, which means that the struggle with hierarchical, oligarchical structures should not be at the level of cultivating alternative values, but at the level of blurring social and electoral crony-sector support. Fiscal incentives for entrepreneurial development, promotion of start-ups, quality of institutions, and investments in human capital and green industries are, albeit stereotyped, but necessary to overcome the negative enchantment of the link between oligarchism and tolerance of hierarchical values. Policymakers should use ecological policy more efficiently, applying different approaches to responsible waste management, efficient energy use, and development of new technologies. This means using taxes, subsidies and fees in strategic and systematic ways. The global ecological policy can be unified for all countries, but regional approaches and instruments should be developed according to specific income levels and abilities of
technological absorption of every country.
Keywords
This article is dedicated to the analysis of the crony sector’s role in the development of well-being and ecologization. After the introduction, section 1 provides a literature review on oligarchization and crony capitalism development. Next, section 2 describes the methodological approaches applied in this article. Section 3 describes the role of add quotation marks to this term, because it is not yet defined in economic development. Further, section 4 is devoted to oligarchical economic development and its impact on ecologization. Finally, the last part presents conclusion and recommendations of the article., Keywords: oligarchy, crony-sectors, ecologization, institutions, well-being, environmental taxes.
Citation
Koziuk, V., Dluhopolskyi, O., Farion, A., & Dluhopolska, T. (2018). Crony Sectors as a Barrier to Economic Well-Being and Ecologization (Case of Ukraine). Economics and Sociology, 11(3), 113-132.