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How Ownership Concentration Is Happening, and Why It Matters

While the globalization that embodied the 1990s liberated multinational corporations, the advent of the Internet economy a decade later boosted corporate concentration further. And the adverse effects this is having on competition, wealth distribution, and fiscal transparency are likely to worsen in the coming years.

DUBAI – If the global economy were a chess game, few pieces would be left on the board. Most would be relegated to the role of bystanders, observing a concentration of power in the hands of an ever-dwindling number of global players. Now let us imagine that the pieces left standing are corporate entities, with a shrinking number of ultimate owners at the helm. This analogy fundamentally characterizes the global economy today.

The globalization that embodied the 1990s unleashed the power of multinational corporations, enabling them rapidly to crush local competition in smaller markets. With the advent of the Internet economy a decade later, online distribution and network effects boosted corporate concentration further, giving rise to behemoths like Amazon, Google, Airbnb, and Facebook.

Today, corporate ownership concentration is being fostered by new factors, which could ultimately pose a systemic threat to the global economy. One of the most important is the decline of public equity markets across developed economies: the number of companies accessing them has halved during the past decade. In most markets outside Asia, new firms are not listing; on the contrary, in response to greater compliance and regulatory obligations, some are de-listing.