How many billionaires are self made?
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The world remains on a fragile recovery path after the 2008 crisis, yet there has been no slowdown in the growth of extreme wealth. From 1996 to 2014, billionaires’ wealth worldwide has grown six-and-a-half times; for Indian (dollar) billionaires this growth has been a phenomenal 40%, says a paper from the Peterson Institute for International Economics, in the US.
A majority of these billionaires are self made. Data from a paper, ‘The Origins of the Super Rich: The Billionaire Characteristics Database’, by Caroline Freund and Sarah Oliver, shows that 63% of India’s billionaires are self made, and their wealth accounts for about 49% of the total wealth of billionaires in the country. In emerging markets, close to 80% of billionaires are self made.
In 1996, China did not have a single billionaire. Fast forward to 2014, and the list of Chinese billionaires has risen to 153. Only three of these billionaires have inherited their wealth, and only two have political connections that have helped them expand their fortunes. Within Europe, wealth has moved eastwards, while in Asia, wealth has moved from Japan to China.
This fast growth of self made billionaires can be seen in India too—self made billionaires grew their wealth nearly 17 times since 2001, compared to nine times for those who inherited wealth. In Europe, in contrast, billionaire wealth is still largely inherited, and over 20% of inherited billionaires are fourth-generation or later.
At close to 50%, Latin America accounts for the largest share of inherited billionaires, followed closely by the Middle East, where about 44% of all billionaires have inherited their wealth.
The authors of the paper have one caveat though: their source of data is the Forbes magazine rich list. They say that it is possible that some private companies may not have made it to the list as valuation is difficult. The other concern is that inherited wealth is more likely to be diversified, and thus may have been overlooked. Here are four sets of charts that examine the characteristics of billionaires.
The list of inherited billionaires includes names from India’s biggest corporate houses: Kumaramangalam Birla, Venugopal Dhoot, Pankaj Patel and Adi Godrej, to name a few. The technology sector accounts for the greatest share of self made billionaires in India. This is closely followed by the consumer sector, which has names like jeweller Nirav Modi and soft drinks maker Ravi Jaipuria.
In 1996, India had only three billionaires—Dhirubhai Ambani, Lakshmi Mittal and Kumaramangalam Birla. By 2001, Mittal had left this list, but Shiv Nadar and Azim Premji made their entry. The entrance of Nadar and Premji, both of whom built their wealth in the IT sector, was a sign of the riches that leaders of this sector would reap. It took only 13 years for the list of billionaires to grow from five to 56. By 2014, the IT sector in India accounted for seven billionaires.
Who are the billionaires who lead consumer firms in India? This list includes leaders of several automotive and related industries such as Rahul Bajaj, Vikram Lal, Baba Kalyani and Lachhman Das Mittal. The richest Indian billionaire is Mukesh Ambani, closely followed by Lakshmi Mittal and Premji.
In 1996, there were 31 women billionaires worldwide. By 2014, that number increased by 480% to 180. However, this is way behind the overall rate of increase of billionaires worldwide. Only two Indian women, Savitri Jindal and Indu Jain, are billionaires. Globally, only 43 women are self made billionaires. The list of self-made women billionaires includes Facebook chief operating officer Sheryl Sandberg, media magnate Oprah Winfrey and founder of clothing chain Forever 21 Jin Sook Chang.