The number of billionaires is growing faster in emerging markets compared with developed countries, with developing countries increasingly become billionaires by creating new products or businesses, but not at the expense of using links with the mining sector or proximity to political forces, found in his research “the origin of the super-rich: the database of the characteristics of the billionaires,” Caroline Freund and Sarah Oliver of the Washington-based Institute of world economy Peterson. However, this conclusion does not apply, and in this respect it is comparable only with a narrow range of countries, such as Angola or Romania.
Scientists had based his research for the Forbes 1996-2015 years, and have added more detailed individual data. The list of 2015 came in 1826 billionaire.
On the General background
“What sets Russia on the General background, so is the prevalence of political connections and natural resources in wealth creation. Russia is behind in terms of number of company founders, but is found on volume “politically connected” riches, even in comparison with other BRICS countries,” says Caroline Freund, a co-author of the study and former chief economist for the Middle East and North Africa. In Russia, the share of wealth that occurred because of political connections, is much higher than in any other BRICS country, she said.
According to the results of the analysis, in Russia 64% of the billionaires became the owners of such wealth because of political connections and of proximity to raw materials. In the other BRICS countries — Brazil, India, China and South Africa — this proportion is 4.6%, to 10.7%, 9.2% and 12.5%, respectively. The percentage of billionaires the founding companies in those States exceeds 20%, and in China reaches at 40.1%. But in Russia it is equal to only 10.8 percent.
In other CIS countries included in the study, the proportion of political connections explain sverhbogatyh too high: for Kazakhstan, the figure is 100%, for Ukraine — 55.6 per cent. “Globally in the world only 10% of billionaires owe their state of political relations and resources,” says Freund.
The wealth of billionaires is due to political relations, have a negative impact on economic growth, showed earlier Sutirtha bagchi (University of Michigan) and Ian Svejnar (Columbia University) in the article of 2013 “does income inequality on growth? The effect of billionaire wealth, income distribution and poverty”. And Freund also claims that sverhbogatyh resulting from the creation of new products, processes or technologies, allows economies to show “very good results”. In the case where the wealth from other sources, this is not happening,” she says.
Not enough companies
What in Russia is dominated by billionaires with political capital, actually less of a problem than the low percentage of founders of their own companies, says Freund. The increase in the number of founders in other countries was associated with an increase in the number of major international companies — and they create jobs and help countries to modernize the economy. “The American retail chain Walmart employs more than 2 million people, Foxconn, the Chinese manufacturer of the iPhone and iPad, employed more than million people, the Indian conglomerate Tata — more than 250 thousand”, — quotes the examples of the economist. Such companies grow to impressive size at the expense of their own advantages, the most productive. As they attract more workers, output and productivity are growing throughout the economy, he said. All countries have made the transition from an emerging to a developed market, did it with the help of large private companies, she adds: in the United States were General Electric, Ford, Standard Oil and others, China — Foxconn, Alibaba, Baidu and others. Russia lacks large companies, not connected with mining of minerals, said Freund.
In Russia not only too many politically-related and resource-related wealth — too high share, considering the share of Russia in global business. “Usually big companies and big money go hand in hand, China and the United States, many of both; Russia and Brazil too much money with regard to their share in the number of large corporations”, — said the expert.
China accounts for 9.2% of the world’s billionaires, and about 10% of firms in Global 2000 (Forbes list includes the world’s largest companies), were in mainland China. For Russia these figures are equal to 7 and 1%, respectively.
Wealth is considered inherited if the billionaire list of 2014 relative (a brother or sister, child, wife, etc.) the founder of the company, which is the source of wealth. A striking example — Donald trump, the President of the construction conglomerate and a member of the current presidential race, the initial capital inherited from his father.
Wealth is the earned on their own, if the owner — founder of his company or if his income was the result of a position at another firm. Within the group of billionaires with this type of wealth are distinguished in 4 types. The first is the companies ‘ founders, such as bill gates (Microsoft) in the United States and Arkady Volozh (Yandex) in Russia, gives the example Caroline Freund. Second — management personnel. The third and the fourth type — the financiers (for example, Boris mints, O1) and people associated with natural resources (hydrocarbons, minerals), or those with the political resource.
“Resource extraction is related to the control over the territory associated with these resources, and control are often distributed in the framework of the state contracts” — write Freund and Oliver. In this case, are politically motivated as the history associated with positions in the government, which he held before the billionaires, close relatives in government and controversial licenses, and assets received during privatization, “by definition, implies the existence of a relationship with the state”. “This group includes Carlos slim, who won the privatization of the largest telecommunication companies in Mexico (Telmex), or Vagit Alekperov, a former Deputy Minister of the oil and gas industry and current President of LUKOIL,” explains Freund.
Financiers and heirs
More and more billionaires earn a fortune on their own, from scratch, the work of economists at the Peterson Institute. In 1996 the heirs in the Forbes list was more than billionaires self-made. However, the technological boom of 2001 changed this ratio, noted by Freund and Oliver in his article. The only regions where the share of inherited wealth is growing, and the number of founders of companies in the total number of billionaires falls, was the middle East and North Africa.
The United States is more “dynamic” from the point of view of wealth creation than countries of the old world: the share of billionaires who have achieved all on their own, there grew the fastest. Despite the considerable decline in the period between 1996 and 2001, in Europe in 2014, the heirs still had more than half of all large States. From Europe come from the “old” state: more than 20% of billionaires are the heirs there are at least fourth generation inherits. For the USA this figure does not exceed 10%, and in other developed countries no States over three generations.
The average age of sverhbogatyh in the United States and Europe also differ significantly. In 2014 he was 42 and 61 years respectively, with European the state of “getting old”: in 2001 their average age was 52 years. The average age founded by billionaire firms in the two regions is 33 and 38 years old: to grow a multi-billion dollar business in Europe takes more time. “The difference is partly explained by the fact that in the US a lot more billionaires who earned the status through their own efforts in the technology sector. They account for 12% of all billionaires in the U.S. (56 people) — versus 5% of billionaires in Europe (17 persons) and their business, usually young,” the study authors write.
In the U.S. one of the key drivers of the creation of States, with billions of dollars, became the financial sector: it accounted for 27% of American billionaires in 2014. 40% growth in the total number of American billionaires from 1996 to 2014 due to the growth conditions in the financial sector — compared with 14% in Europe. Particularly strong among financial institutions are the hedge funds: if in 2000 their weight in the total number of billionaires accounted for 10%, then by 2015 it increased to 22%. The total state associated with the American hedge funds, in 2015 exceeded $120 billion.