Seven out of 10 superrich inherited

By Yoon Ja-young

Three out of four of the superrich in Korea have inherited their fortunes while self-made billionaires are increasing in other countries.

According to Peterson Institute for International Economics, which analyzed billionaires included on the Forbes’ list between 1996 and 2015, 74.1 percent of Korea’s billionaires inherited their fortunes. Only Kuwait, Finland, Denmark and the United Arab Emirates had higher ratios of inherited wealth than Korea.

In China, only 2 percent of the rich have inherited their wealth, while the ratio stood at 18.5 percent in Japan and 28.9 percent in the United States. The global average of the inherited superrich stood at 30.4 percent, which is less than half that of Korea.

The institute noted that the ratio of self-made superrich is increasing worldwide. While 44.7 percent of the billionaires were self-made in 1996, it soared to 58.1 percent in 2001, and 69.6 percent in 2014.

“Billionaires who inherited their wealth were more numerous than self-made billionaires in 1996. The tech boom in 2001 helped put self-made billionaires in the majority. Rapid emerging-market growth strengthened self-made wealth even more over the next decade,” the report noted.

It pointed out that wealth is increasingly self-made, even in the advanced countries. “The relatively rapid growth in the number of self-made billionaires and their wealth alleviates some concerns raised by the economist Thomas Piketty about capital growing faster than income, which would cause fortunes to become more concentrated over time if capital remained in the same hands,” the report added.

In Korea, however, the economy is dominated by chaebol. As it lacks dynamism, young people seek stable jobs in the public sector instead of starting their business based on creative ideas.

The institute pointed out that the United States is more dynamic than Europe. “Data analysis shows that the superrich in the United States are more dynamic than their counterparts in Europe. Just over half of European billionaires inherited their fortunes, as compared with one-third in the United States,” it added.

The report noted that Europe is home to the oldest fortunes, where over 20 percent of the billionaires who inherited their money are fourth generation heirs or later. “In contrast, less than 10 percent of inherited US fortunes are fourth generation or older, and in other advanced countries no fortunes are older than three generations,” according to the report.

However, transition is going on among Korean chaebols, with the grandchildren of chaebol founders increasingly taking over control of the groups.

Koreans amount to 1.6 percent of the world’s billionaires. Only 25.9 percent of the Korean superrich were self-made. Among them, 18.5 percent were company founders while 3.7 percent were owners and executives. Those from the financial sector comprise 3.7 percent of the Korean superrich.