Universal features in the growth dynamics of complex organizations

TL;DR

This paper uncovers universal statistical features in the growth dynamics of complex organizations, showing that GDP fluctuations across countries follow similar patterns to firm growth, indicating common underlying mechanisms.

Contribution

It demonstrates that the distribution of GDP growth rates exhibits fat tails and scales with GDP, revealing universal growth features across different types of complex organizations.

Findings

GDP growth rate distributions have fat tails

The width of the distribution scales as a power law with GDP

Results align with similar patterns observed in firm growth

Abstract

We analyze the fluctuations in the gross domestic product (GDP) of 152 countries for the period 1950--1992. We find that (i) the distribution of annual growth rates for countries of a given GDP decays with ``fatter'' tails than for a Gaussian, and (ii) the width of the distribution scales as a power law of GDP with a scaling exponent $\beta \approx 0.15$. Both findings are in surprising agreement with results on firm growth. These results are consistent with the hypothesis that the evolution of organizations with complex structure is governed by similar growth mechanisms.