ECONOMIC CONSEQUENCES OF CRONY CAPITALISM SYSTEM

The most important economic fact of our time is that we are living in an era of growing income inequality. Globalization and technological boom only increase the income gap of different segments of the population. The main reason of economic inequalities in many countries of the world is the strong links between government officials and business structures. The new type of economic system which is called crony capitalism undermines the centuries?old tenets of a free market economy. So there is a rising actuality of systematization of all negative effects of this type of economic system in the world. Purpose. On the basis of carried-out research, it will determine the features and economic consequences of crony capitalism system in the different countries of the world. Conclusion. The analysis suggests that crony capitalism generates significant economic rents, which result in a misallocation of resources and lower incentives for wealth creation. In addition, the corruption constitutes a considerable impediment to growth and development. The most damaging aspect of crony capitalism is its tendency to discourage equitable distribution of resources and income adjustment at a time when such traits are central to economic success. Crony capitalism promotes monopolization of economy, the growth of social injustice and inequality, creating obstacles for development of entrepreneurship, degradation of healthy competition and provokes corruption. Authors regard a fundamental solution of this problem in rising of effective anticorruption practices of the world countries that will have a multivectorial influence in the scale of international business.