The presence of phenomena such as Blat or Guanxi can reduce the efficiency of allocation: we prefer people from our "network" over strangers. 

The presence of phenomena such as Blat or Guanxi can significantly improve the quality of economic policies: policy-makers are much better informed about the real world and they are much less likely to be biased in their decisions (or let themselves be influenced by factors such as nepotism).

Guanxi is typically used to describe interpersonal networks emerging in China, Blat describes/described a similar phenomenon in the Soviet Union/Russia.

“Blat” was used to describe the situation in the USA during late 19th century (the "Robber Barrons' Period).