How much do the billionaires in the region collect?

The extreme concentration of wealthio is one of the most obvious expressions of inequality in Latin America and the Caribbean, warns of Economic Commission for Latin America and the Caribbean (ECLAC) in its latest report “Inclusion of work as a central axis of inclusive social development”.

Measuring and tracking extreme wealth provides an approximation of how some of the most important factors that reproduce inequality operate, the report points out. ECLAC published in November this year.

ECLAC also warns of the negative effects that excessive concentration of wealth can have on economic growth and increase citizens’ mistrust of elites and institutions, ECLAC points out.

These problems are exacerbated when the origin or increase of wealth billionaires This is explained by their political connections or ties to the state apparatus, which can lead to questioning the legitimacy of their heritage and fuel social tensions, the report added.

Another reason for monitoring extreme wealth is that a high concentration of wealth provides opportunities to obtain permanent and progressive tax revenues that can be used to implement public policies that guarantee social rights.

What is the concentration of wealth in Latin America and the Caribbean?
The ECLAC recognizes the lack of official sources that allow measuring the frequency of extreme wealth in the countries of Latin America and the Caribbean, which is why he resorted to information collected on Forbes’ annual list of billionaires, which despite the limitations of this data, represent the most far-reaching source in the region for measuring extreme wealth.

The Forbes list includes everyone in the world who has a verified personal net worth of $1 billion or more, excluding those who make money from illegal activities.

He Forbes ranking 2023 of the richest people in the world joined Panama, the regional highlight is billionaire Stanley Motta, an investor whose portfolio of Latin American companies includes the Panamanian bank Banco General.

How much do the billionaires in the region collect?
In this sense, the assets of billionaires in Latin America and the Caribbean reached 453,000 million current dollars in 2022, 4,600 million more than in 2021 and 56,300 million more than in 2019. However, due to inflation that was strongly felt at the international level in 2021. and 2022, the real wealth of Latin American and Caribbean billionaires fell 6.5% in 2022 compared to 2021.

In real terms, in 2022 the wealth of the region’s billionaires was very close to what they had in the year immediately before the pandemic, and 4.4% less than what they had in 2012.

The evolution of the wealth of the super-rich in Latin America and the Caribbean is very consistent with the behavior of the aggregate economy: the correlation between regional GDP and billionaire wealth was 0.65 between 2012 and 2022. As for recent years, in 2020 billionaire wealth decreased mainly due to the crisis related to the pandemic, then strongly recovered in 2021 in line with the reactivation of the economy resulting from the expansionary monetary and fiscal policy, and in 2022 it fell in real terms due to inflation.

In 2021, the assets of 105 citizens from eight countries in the region represented 3.6% of the total wealth of the population of all Latin American and Caribbean countries included in the Credit Suisse Research Institute (2022) report.

When analyzing the situation by country, the highest level of concentration of extreme wealth in 2021 occurred in Brazil, where billionaires owned 6.4% of the national wealth, followed by Chile (5.4%) and Argentina (4.7%).

In 2022, the seven Latin Americans whose personal wealth was equal to or greater than $10,000 million accounted for 41% of the total wealth of billionaires in the region, and their wealth represented about 3.2% of the total wealth of billionaires in the region. GDP of all Latin America.

For this year, the influence of the wealth of billionaires, whose wealth was equal to or greater than 10,000 million dollars, on the regional GDP was less than that of 2021 (3.8%), but greater than that recorded in 2019 and 2020. .

The sectors of activity in which most of the real assets of Latin American billionaires were concentrated were the following: finance and investments, telecommunications,
food and drink and mining and metals.

Compared to 2021, the largest relative increase in the wealth of billionaires was recorded in the other, diverse and media and entertainment sectors; The biggest decline was recorded in the technology, healthcare and fashion and retail sectors.

Comparing the actual wealth billionaires had in 2022 to what they had in 2019, significant increases are seen in the following sectors: healthcare (51%), diversified (34%), mining and metals (26%) and energy (22%). .

In the health sector, the increase occurred fundamentally in 2021, since during the first year of the pandemic (2020) the assets of the super-rich in that sector hardly changed, unlike what happened in other sectors, where contraction was recorded.

Between 2019 and 2022, the largest relative decreases in wealth were recorded in the following sectors: media and entertainment (36%), manufacturing (25%), other (23%), food and drink (18%), and fashion and retail (17 %). He billionaire wealth of the food and beverage sector and, above all, of the manufacturing sector, mostly fell in 2020.

How hard is inheritance?
Finally, it was pointed out that inheritance contributes to the reduction of social mobility and the reproduction of inequality over time. One might believe that in modern economies guided by meritocratic values, the weight of inheritance is not as important as it was in the past, but in recent decades the share of intergenerational transfers has increased in the total wealth of some developed countries.

As for the importance of inheritance for billionaires, a survey of members of the Forbes list between 1996 and 2015 found that the percentage of self-made billionaires has increased, especially in emerging markets.

But in 2019, 2020 and 2021, inheritance plays a very relevant role in the wealth of Latin America’s super-rich, as just over half of them inherited all or part of their wealth.

These figures are very similar to those in Western Europe and India, and far exceed the levels recorded in the United States and Canada, China and the rest of the world.