Close ties between big business groups and political elites are ubiquitous in Asia.
We term these links the Connections World. In this world, business group structures facilitate opaque corporate governance, weak minority shareholder rights and a raft of undesirably close relationships with politicians. They also leverage their connections to build substantial market power.
Although Asia’s high levels of concentration and business entrenchment have not been a barrier to growth, they have resulted in constraints on competition and, in particular, a brake on innovation, threatening Asia’s prospects. Yet neither businesses nor politicians have incentives to deviate from their mutually rewarding relationships.
