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The synchronization club: classification of global economic groups by inequality

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Abstract:

We find that, from 1970 to 2006, the GDPs of 181 countries are described by a log-normal with a power law tail before 1992, but by a kinked power law distribution after 1992. In the 15 years from 1992 to 2006, there are two obvious scale-free zones for annual GDPs, ranked from the largest to smallest. If the countries in each scaling region are regarded as a group, the world is divided into two groups, each with a roughly stable number of members. The power exponents of the two groups are different and hence lead to different inequalities. Therefore, the basis for classification is the macro-consistent inequality within each group. The wealth grows in a synchronous nonlinear manner within groups that have a stable wealth distribution and rank structure. If each group is considered as a club, we name it a ‘synchronization club’.

Keywords: C40; C51; E25; F01; F02; GDP; inequality; log-normal; power law; ‘synchronization club’

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036846.2014.904490

Affiliations: 1: Business School, Sun Yat-Sen University, Guangzhou, 510275, China 2: Michael G. Foster of Business, University of Washington, Seattle, WA, 98195-3226, USA

Publication date: July 23, 2014

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