The synchronization club: classification of global economic groups by inequality

Hongduo Cao, Ying Li and Yong Tan

Applied Economics, 2014, vol. 46, issue 21, 2502-2510

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'.

Date: 2014
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DOI: 10.1080/00036846.2014.904490

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