A new Oxford study examines the varying fortunes of the world’s richest people to identify where the top 1 per cent come from. Until 2002, the representation of developing countries was in decline but recently it has spiked significantly.

 

Who are the Global Top 1%?Americans still dominate the global top 1 per cent, but proportionally there are far fewer than in 1998 when they made up nearly half the group

By Matt Pickles 

Research from Oxford's Department of Economics finds that many more of the global super-rich are from emerging countries, with a corresponding decline in the share of those from advanced economies. The region with the fastest growth is developing East Asia and the Pacific, explained largely by China's economic rise.

The United States still dominates, with 38 per cent of the individuals in the top 1 per cent in 2012. However, this is much smaller than in 1998 when it made up nearly half. By contrast, China's share rose from 1.3per cent to 3.4per cent between 2005 and 2012. Its share of the world's billionaires is much larger – this year it has hit 14 per cent. The rise of the ‘emerging economies’ is leading to historically-unprecedented shifts in the global economyThe rise of the ‘emerging economies’ is leading to unprecedented shifts in the global economy

The working paper by the University of Oxford and King's College London finds that citizens of the advanced economies still make up the largest share at 79 per cent. They calculate, however, that this share is on a downward trend, and is 7-11 percentage points lower than between 1988-2005.

Japan is second to the United States, with a share of 8.5 per cent; followed by Germany at 5.8 per cent, France at 5.4 per cent, Brazil at 5.3 per cent, and the United Kingdom in sixth position at 4.7 per cent. 

The researchers combined two sets of data: national household surveys covering most of the global population and economy, and top income shares from the World Top Incomes Database (estimated from income tax records). They applied econometric techniques to produce a global income distribution with fine-grained estimates of the rich in each country. The top income shares described here are based on purchasing power parity (PPP), whereby researchers adjust market exchange rates between countries to estimate the purchasing power of each country's currency.We find that the representation of developing countries in the global top 1% declined until about 2002, but since 2005 it has risen significantly.The representation of developing countries in the top 1 per cent declined until 2002, but since 2005 it has spiked

The study describes China’s rise as 'clear' but says its impact is 'modest'. The other giant of the developing world, India, accounts for fewer than 130,000 of the group despite rapid economic growth over the last 30 years and despite having 4.6 per cent of the world’s billionaires this year. 

Overall, the study finds there is less of a gap now between the world’s advanced and developing countries compared with previous decades, but inequalities still remain very high. The researchers show that Brazil is the developing country with the largest share of the 1 per cent, with 5.3 per cent in 2012. Not only is Brazil large and relatively prosperous but it also has a very high level of inequality; so while rich Brazilians are particularly rich, allowing them to cross the threshold, the incomes of the non-rich are correspondingly lower. The fact that both China's and India's shares of billionaires are disproportionately higher than their share of individuals in the global income top 1% per cent also suggests they are particularly unequal at the very top compared with other countries. 

The turning point for the emerging economies appears to have been around 2005. That is when its citizens increasingly started to enter the ranks of the global rich. 

Professor Sudhir Anand from the Department of Economics

The study's authors are Professor Sudhir Anand from Oxford's Department of Economics, and Dr Paul Segal, from the Department of International Development at King's College London. Professor Anand comments: 'The turning point for the emerging economies appears to have been around 2005. That is when its citizens increasingly started to enter the ranks of the global rich. This trend was undoubtedly reinforced by the global financial crisis in 2008, which slowed growth in the advanced economies. But developing countries were already beginning to catch up before then. As long as emerging economies continue to grow faster, which seems likely for the near future, the trend will continue with developing countries comprising an increasing share of the global top 1 per cent.' Professor of EconomicsProfessor of Economics Sudhir Anand of St Catherine's, Oxford

Dr Segal adds: 'We can only speculate on what it means to have poorer countries represented in the global elite. It is by no means clear that the rich from traditionally "poorer" countries will contribute to declining global inequality, or bring benefits to the less fortunate. We see inequalities within countries remaining high, and senior executives and business owners may find they share less in common with citizens of their own country than with their counterparts in other countries. They become a global class of their own.' 

The working paper, 'Who are the Global Top 1%?', is published on the Department of Economics website.

 
Images: Pintrest, Shutterstock

Comments

By Robert P Bruce
on

The fact that inequality is still growing rapidly underlines the failure of national economic policies to redistribute wealth, and the continuing abuse of Global tax havens by the World's richest citizens.

Back in 2014 Oxfam highlighted the shocking statistic that the World's richest 85 people now owned more wealth than the poorest 3.5 billion. And this inequality is growing so rapidly that now, two years later, that same number is down to just 62. Meanwhile, in the United States, the five children and one daughter-in-law of Sam and Bud Walton (founders of Walmart) now possess more combined wealth than the bottom 30% of all Americans, according to Forbes magazine.

Against the backdrop of record levels of Global wealth, it is scandalous that we are still failing to fund the UN Global Goals to help the World's poorest citizens. Worse still, we are ignoring the effects this unfair distribution of wealth is having on spending power of ordinary citizens, which is increasingly leading to stagnation in advanced economies and unsustainable levels of personal debt.

If the protest of Brexit voters in the UK and supporters of Trump in America is to produce any benefit for ordinary citizens, it must lead to new economic policies that support inclusive and sustainable growth. A critical element of this plan must be to end the use of secret accounts in tax havens around the World, which cost developing countries alone over $170 billion every year in lost tax revenues - more than the total of all Global aid they receive. Only when companies and individuals are held to account for the tax they owe to the countries where they make their fortunes, will it be possible to at last build a "Global Race" in which we can all be winners.

Robert P Bruce - author www.TheGlobalRace.net

By Wasay Majid (Fo...
on

With the advent of the free market system, the rationale of private property witnessed a great momentum. Overtime, the amalgamation of private property and private enterprise under free markets led to more and more privatization of public property. As the traditional role of governments began to shrink, all the while filling their coffers with more due to a growing private sector, it gave rise to a greater need for the provision of security to the private sector. Over time more and more of the core responsibilities of the state got channelled towards private enterprise, resulting in an eventual moral shift or complete absence. The remaining roles like justice, humanitarian concerns, and basic needs have been made the responsibility of the civil society and philanthropists. This gradually shifted the focus of idle governments towards concentrating on internal security, police, riot force, secret police, domestic intelligence and as a consequence, diminishing transparency. The developing and the least-developing world were already plagued by such ills. Now the developed world provided a formal (and moral) structure to it. Majority of the leaders of today are corrupt, as they have the machinery in place for such labor. This mass accumulation of illicit wealth by the ones in power has crossed international borders to acquire more and more property, virtually untraceable. This was the real beginnings of price distortions for 'a right to a decent life'.
More and more illicit funds have gone into property acquisitions via offshore companies globally towards such market distortions. If we take a look at the under-developed countries, the parking of black money into property paves way for higher and higher property prices too. Both ends of the spectrum are feeling the feeding off property. As mentioned earlier, an OECD warning is looming, warning us of the evil monster aptly named corrective ‘market forces’ may be heading this way. Life is too precious for the ‘invisible hand’ to decide its fate.

Till now all this has been a neatly guarded secret. With the dawn of new information via Panama leaks, the story of power and might is suffering a ‘slight’ shift. The possible outcomes of this shift may very well witness some long over due reality checks. We hope for slow but sure justice to prevail from such a revelation.

By Stephen Fisk
on

I agree totally with the comments by Robert Bruce. Societies with the biggest discrepancy of income between rich and poor tend to be less happy, and within each society very rich people are not on average any happier than people of medium income.

It is unfortunate that the tone of this article gives the impression that the presence of extremely rich individuals is something to be proud of. We should avoid any implication that countries with a lot of them should be placed at the "top" of any league table.

By Peter Hulse
on

It would hep people's appreciation of this article if it were pointed out that the top 1% are those with more than, roughly, half a million pounds in assets, and so includes a fair number of Londoners who don't think of themselves as rich (4.7% in the UK out of 7 billion, about 3.5 million UK citizens). Half a million is my initial estimate, confirmed by the BBC's More Or Less programme.

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