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

The Peterson Institute released its new study, Rich People Poor Countries: The Rise of Emerging-Market Tycoons and their Mega Firms, by Caroline Freund, on February 11, 2016. Freund presented her innovative take on corporate innovation, growth, and inequality, which combines insights from new trade research, growth theory, and an original dataset of global business founders and billionaires. Tyler Cowen of George Mason University, and Tarun Khanna of Harvard Business School, provided comments.


February 11, 2016, 3:00 AM EST
Peterson Institute for International Economics, Washington, DC
Caroline Freund (PIIE), Tyler Cowen (George Mason University) and Tarun Khanna (Harvard Business School)

Event Summary

In Rich People Poor Countries, Freund examines how a large and expanding group of businesspeople from developing countries have accumulated billion-dollar fortunes to uncover the type of activities that are well rewarded in different corners of the world.  She classifies the world's billionaires on the Forbes World's Billionaires list as company founders, executives, financiers, politically-connected, or inheritors. Two important findings are: (i) a rising share of the global superrich are from emerging markets, and (ii) the fastest growing group are company founders. Linking the individual-level data with data on the largest global companies, she shows that these captains of industry are propelling poor countries out of small-scale production and agriculture and into a future of multinational industry and service-based mega firms. The making of extreme wealth is a very positive sign for a country's modernization when it is associated with the creation of large and fast-growing firms, especially those closely integrated into the globalized economy. Freund also explores differences across regions, highlighting East Asia as the most dynamic region and the Middle East and North Africa as being trapped in a business model reliant on bequests and political connections. This story of emerging-market entrepreneurs and the global businesses they create dramatically illuminates the process of industrialization in the modern world economy.

Freund, senior fellow at the Institute since May 2013, was chief economist for the Middle East and North Africa at the World Bank from 2011 to 2013. Prior to that she was lead economist from 2009 to 2011 and senior economist from 2002 to 2009 in the research department of the World Bank. She was also senior economist at the International Monetary Fund during 2006–07 and economist at the Federal Reserve Board from 1997 to 2003.

Cowen is currently the Holbert C. Harris Chair of Economics at George Mason University. He edited the volume Public Goods and Market Failures and wrote Explorations in the New Monetary Economics with Randall Kroszner. He is author of Markets and Cultural Voices: In Praise of Commercial Culture, as well as What Price Fame? and Creative Destruction.  Tyler is known globally for his insightful and influential commentary on economic analyses and events.

Khanna is the Jorge Paulo Lemann Professor at Harvard Business School, where he has studied and worked with entrepreneurs and investors in emerging markets worldwide. He was named Harvard University's Director of the South Asia Institute in the fall of 2010. He joined the HBS faculty in 1993, after obtaining an engineering degree from Princeton University (1988), a PhD from Harvard (1993), and an interim stint on Wall Street. He currently teaches in Harvard College's undergraduate General Education core curriculum in a university-wide elective course on entrepreneurship in developing countries, and in HBS' Owner/President Management executive education program. He is also the Faculty Chair for HBS activities in India and South Asia.

The Institute is grateful to the ERANDA Foundation for its generous long-term support of this original independent research by Caroline Freund as part of its ongoing support for work on Inclusive Capitalism and Inequality issues at the Peterson Institute and around the world.