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Insights from Physics into Development Processes: Are Fat Tails Interesting for Development Research?

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  • Schultze, Uta

Abstract

This article explores the question of whether concepts and methods used in non-equilibrium statistical physics, already successfully applied in biology, epidemiology and finances, can also be a useful tool for research into economic development. The aim of this article is to describe one such phenomenon, the phenomenon of “fat tails”, for a multi-disciplinary public and to stimulate discussion on its potential use. The method is explained and empirically tested by looking at the example of the probability distribution of per capita GNP in various countries. It is shown that this distribution does indeed have “fat tails”. The significance of the appearance of such fat tails is discussed and it is stressed that they reflect a complex dynamic which cannot be captured using only mean values and variances. The article also suggests some other pertinent problems of development research where they may possibly be applied.

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  • Schultze, Uta, 2000. "Insights from Physics into Development Processes: Are Fat Tails Interesting for Development Research?," Discussion Papers 280882, University of Bonn, Center for Development Research (ZEF).
    • Handle: RePEc:ags:ubzefd:280882
    DOI: 10.22004/ag.econ.280882
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    Cited by:

    1. Stark Oded & Wang, 2000. "A Theory of Migration as a Response to Relative Deprivation," German Economic Review, De Gruyter, vol. 1(2), pages 131-143, May.
    2. Oded Stark, 2006. "Status Aspirations, Wealth Inequality, and Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 10(1), pages 171-176, February.
    3. Steve Boucher & Oded Stark & J. Edward Taylor, 2009. "A Gain with a Drain? Evidence from Rural Mexico on the New Economics of the Brain Drain," International Economic Association Series, in: János Kornai & László Mátyás & Gérard Roland (ed.), Corruption, Development and Institutional Design, chapter 6, pages 100-119, Palgrave Macmillan.
    4. Mduma, John K. & Wobst, Peter, 2005. "Village Level Labor Market Development in Tanzania: Evidence from Spatial Econometrics," Discussion Papers 276260, University of Bonn, Center for Development Research (ZEF).
    5. Stark, Oded & Wang, You Qiang, 2005. "Towards a Theory of Self-Segregation as a Response to Relative Deprivation: Steady-State Outcomes and Social Welfare," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 223-242.
    6. von Braun, Joachim & Grote, Ulrike & Jütting, Johannes, 2000. "Zukunft der Entwicklungszusammenarbeit," Discussion Papers 280888, University of Bonn, Center for Development Research (ZEF).
    7. Zimmermann, Roukayatou & Ahmed, Faruk, 2006. "Rice Biotechnology and Its Potential to Combat Vitamin A Deficiency: A Case Study of Golden Rice in Bangladesh," Discussion Papers 276268, University of Bonn, Center for Development Research (ZEF).
    8. Abdallah, Jumanne & Sauer, Johannes, 2005. "Efficiency and Biodiversity – Empirical Evidence from Tanzania," Discussion Papers 276264, University of Bonn, Center for Development Research (ZEF).

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