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What Is the Concentration of Wealth?

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  • Written By: Geri Terzo
  • Edited By: PJP Schroeder
  • Last Modified Date: 07 November 2016
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When the concentration of wealth is in effect, individuals, businesses, and countries already possessing an affluent status attract even greater sums of money. Individuals with wealth have the option to continue to grow a personal empire internally or possibly perpetuate the growth of an entire region. This economic expansion can occur by job creation or investment into the development of new buildings and roads. National and global statistics on concentrations of wealth are typically assessed by economists and researchers.

Under the premise of a concentration of wealth, there is not equal distribution of money among citizens in a nation or around the world. Instead, the notion that the rich only become richer is underscored. Wealth can mean different things to different people, but it generally includes cash; investments including stocks, bonds, and other financial securities; real estate and other assets. In some cases, it is the evidence of all these items in relation to indebtedness owed, such as mortgage debt or credit card loans. The wealthiest of families have historically owned the largest percentage of securities that trade in the financial markets, as was the case in the U.S. in 2007 according to Who Rules America?.

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It is common, though not essential, that the concentration of wealth in a country belongs to individuals who generate the highest incomes. This represents the salaries that individuals may earn often from top executive positions, such as the chief executive officer of an organization. Income may also be earned through investments or dividends, which are cash and stock payments on investments, or rental properties. Many affluent individuals, however, inherit wealth or obtain it in other ways aside from income. The concentration of wealth in a country may be limited to the upper class, top-paid executives and business owners, and recipients of wages and salaries.

It is possible for the concentration of wealth to occur not only in individuals but also throughout different countries. High net-worth individuals are responsible for creating some of the most wealthy nations in the world as the most developed countries tend to be those with the largest number of the world's richest individuals. Alternatively, underdeveloped countries are those that tend to have areas of poverty but also growth opportunity. It is possible for economies to expand and for a higher amount of wealth to be drawn to an underdeveloped nation, thereby increasing that country's influence on the concentration of wealth.

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