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.
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 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.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 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.