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Capital death in the world market

Adam Avakian1,*, Boris Podobnik1,2,3, Manuela Piskor2, and H. Eugene Stanley1

  • 1Center for Polymer Studies and Department of Physics, Boston University, Boston, Massachusetts 02215, USA
  • 2Zagreb School of Economics and Management, 10 000 Zagreb, Croatia
  • 3Faculty of Civil Engineering, University of Rijeka, 51 000 Rijeka, Croatia

  • *avakian@bu.edu
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Phys. Rev. E 89, 032805 – Published 13 March, 2014

DOI: https://doi.org/10.1103/PhysRevE.89.032805

Abstract

We study the gross domestic product (GDP) per capita together with the market capitalization (MCAP) per capita as two indicators of the effect of globalization. We find that g, the GDP per capita, as a function of m, the MCAP per capita, follows a power law with average exponent close to 1/3. In addition, the Zipf ranking approach confirms that the m for countries with initially lower values of m tends to grow more rapidly than for countries with initially larger values of m. If the trends over the past 20 years continue to hold in the future, then the Zipf ranking approach leads to the prediction that in about 50 years, all countries participating in globalization will have comparable values of their MCAP per capita. We call this economic state “capital death,” in analogy to the physics state of “heat death” predicted by thermodynamic arguments.

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Phys. Rev. E 89, 032805– Published 13 March, 2014
  • Received 13 November 2013

©2014 American Physical Society

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