Rich People Poor Countries: The Rise of Emerging-Market Tycoons and Their Mega Firms

Rich People Poor Countries: The Rise of Emerging-Market Tycoons and Their Mega Firms

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Overview

Like the robber barons of the 19th century Gilded Age, a new and proliferating crop of billionaires is driving rapid development and industrialization in poor countries. The accelerated industrial growth spurs economic prosperity for some, but it also widens the gap between the super rich and the rest of the population, especially the very poor.

In Rich People Poor Countries, Caroline Freund identifies and analyzes nearly 700 emerging-market billionaires whose net worth adds up to more than $2 trillion. Freund finds that these titans of industry are propelling poor countries out of their small-scale production and agricultural past and into a future of multinational industry and service-based mega firms. And more often than not, the new billionaires are using their newfound acumen to navigate the globalized economy, without necessarily relying on political connections, inheritance, or privileged access to resources. This story of emerging-market billionaires and the global businesses they create dramatically illuminates the process of industrialization in the modern world economy.


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Product Details

ISBN-13: 9780881327038
Publisher: Peterson Institute for International Economics
Publication date: 01/15/2016
Pages: 199
Product dimensions: 6.00(w) x 8.90(h) x 0.40(d)
Age Range: 18 Years

About the Author

Caroline Freund, senior fellow at the Peterson Institute for International Economics since May 2013, was chief economist for the Middle East and North Africa at the World Bank (2011–13). Prior to that she was lead economist and senior economist in the research department of the World Bank. She was also senior economist at the International Monetary Fund and economist at the Federal Reserve Board. Freund works primarily on economic growth and international trade and also writes on economic issues in the Middle East and North Africa.

Sarah Oliver has been a research analyst at the Peterson Institute for International Economics since August 2013.

Table of Contents

Preface xi

Acknowledgments xv

Overview 1

Tycoonomics: Big Firms, Big Money, and Development 3

Structure of the Book 5

A Note on the Approach 10

I The Tycoons

1 Who Are the Superrich? 15

How and Why Do People Become Very Rich? 16

Determinants of Extreme Wealth 18

Takeaways 29

2 Billionaires, by Region and Sector 31

Billionaire Data around the Globe 32

Which Sectors Account for This Growth? 32

Regional Trends: From East Asia to Africa 34

Takeaways 45

II Their Businesses

3 Why Are Large Firms Good for Growth? 49

Firm Size and Allocation of Resources among Firms 52

Evidence on Firm Size 54

Individuals Matter 62

Flood of New Emerging-Market Mega Firms 65

Connecting Firms and Individuals 66

Firms behind Emerging-Market Growth 67

Takeaways 68

4 Historical Experiences of Development: Large Firms and Extreme Wealth 69

Big Firms and Big Money during Industrialization 70

Growth without Large Firms 74

Big Firms and Big Money in Asia 75

Contested versus Uncontested Wealth 79

Big Firms without Wealth Creation 81

Effects of Wealth on the Economy 82

Takeaways 86

5 Big Business, Structural Transformation, and Development 87

Projected Increases in Extreme Wealth in Emerging Markets 89

Extreme Wealth and Structural Transformation 89

Self-Made Founders Employ the Most People 91

Emerging-Market Firms Displace Advanced-Country Firms 94

Is Extreme Wealth Necessary? 97

Takeaways 98

6 Globalization and Extreme Wealth 99

Extreme Wealth and Extreme Talent 100

Examples of the Role of Globalization in Wealth Creation 101

Trickle-Down Wealth 105

Company Exports, Country Trade, and Wealth 107

Takeaways 111

III Demographic Differences

7 A Few Good Women 117

The Amazing Women of China and the United States 118

Sectors of Self-Made Women 118

Why Are There So Few Self-Made Billionaire Women? 120

Why Is China Different? 124

Importance of Female Entrepreneurs for Resource Allocation 124

Women Helping Women 125

Why Do Women Inherit Less Than Men? 125

Takeaways 126

8 Young Entrepreneurs, Younger Firms 127

Emerging-Market Billionaires Are Young 128

Emerging-Market Companies Are Young 130

Transition: Get Richer or Get Out 134

Creative Destruction: Chanties hi the Billionaires List between 2001 and 2014 136

Takeaways 138

IV Inequality and Policy Implications

9 Inequality, Growth, and Redistribution 143

Admiration of the Superrich in Emerging Markers 145

Inequality in the North and South 145

Takeaways 160

10 Policies for Promoting Innovation and Equity 163

Creating an Environment that Is Conducive to Growth 163

Limiting Unproductive but Profitable Activities 172

Takeaways 180

References 181

Index 189

Tables

1.1 Distribution of number and wealth of billionaires, by source of wealth, 2001 and 2014 28

2.1 Sector classification 33

2.2 Distribution of number and wealth of billionaires, by sector, 1996 and 2014 33

2.3 Countries in each regional group, 1996-2014 34

2.4 Distribution of billionaires, by source of wealth and region 2001 and 2014 37

2.5 Distribution of number and wealth of billionaires, by sector and region, 1996 and 2014 39

2.6 Sources of wealth of billionaires in BRIC countries, 2001 and 2014 42

4.1 Industries of the 28 richest individuals in the United States and emerging markets 74

4.2 Number of top 500 largest firms, by country, 1962, 1993, and 2014 78

5.1 Emerging-market share of the world's wealthiest people, 2003, 2013, and 2023 89

5.2 Employment by emerging-market billionaires, 2014 93

6.1 Billionaires connected to major Apple suppliers, 2014 105

6.2 Globalization of largest nonfinancial companies as measured by share of international revenue, by region, 2013 107

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