RESEARCH PROJECT 1
Running head: ECON 483-557 DSA PROJECT FALL2020
1
ECON 483-557 DSA PROJECT FALL2020
Sandra Nwankwo
Bowie State University
Professor Thaddee Badibanga
December 12, 2020
Introduction
The real GDP is affected by various factors and failure to address them affect the economy of the country. Real GDP is a factor that will have an impact on economic growth. The value of goods and services determines whether there can be economic growth as defined by the real GDP. The demand side, as well as the supply side, has the factors affecting GDP and to mention a few, real wages, interest rates and the value of the exchange rate affects the real GDP. Developing countries have been able to strategize on how to stabilize their economy, and that has been made possible because developed countries play crucial roles in economic growth.
The poor and disadvantaged countries face hardships and have been witnessed to have a struggling and unstable economy (Aziz & Azmi, 2017). According to the sentiments of Yolanda (2017), countries need to establish the key aspect the enable a countries GDP to grow. Therefore, in regards to this, this project will focus on real GDP and the factors that affect it. The factor that influences real GDP to be focused on will be physical capital, labor and human capital index. Multiple regression analysis will be executed to help come up with a model that can help predict the real GDP of a country. The obtained information can help in strategizing and planning.
Data Analytics
Descriptive statistics
Table 1: Descriptive Statistics
Descriptive Statistics
N
Minimum
Maximum
Mean
Std. Deviation
emp
35
.1
540.1
29.141
91.7659
hc
35
1.2
3.3
2.491
.6018
rgdpna
35
6305.3
8510747.5
813358.709
1619686.4500
rnna
35
25608.6
29196228.5
3134667.517
5770440.1717
Valid N (listwise)
35
From the above table, data from 35 countries were utilized to get information that can be employed in making well-informed decisions. The mean number of persons engaged was 29.141 million. The mean human capital index was 2.491, with the mean real GDP being $813,358.7 (in millions). The mean capital stock was $3134667.5 (in millions).
Visualization
Figure 1: Histogram of the number of persons engaged
Figure 2: Histogram of Human capital index
Figure 3: Histogram of Real GDP
Figure 4: Histogram of Capital stock
Regression Analysis
Regression analysis is employed in this analysis to model the data so that the obtained information can be used to create a model that can help in defining the impact of various factors on real GDP. The results of the analysis are as shown below.
Model Summaryb
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.993a
.986
.985
201272.5707
a. Predictors: (Constant), rnna , hc , emp
b. Dependent Variable: rgdpna
ANOVAa
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
87939232597181.140
3
29313077532393.715
723.589
.000b
Residual
1255830079442.294
31
40510647723.945
Total
89195062676623.440
34
a. Dependent Variable: rgdpna
b. Predictors: (Constant), rnna , hc , emp
Coefficientsa
Model
Unstandardized Coefficients
Standardized Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
-12089.801
157012.335
-.077
.939
hc
-19988.297
62897.088
-.007
-.318
.753
emp
155.537
486.070
.009
.320
.751
rnna
.278
.008
.990
35.363
.000
a. Dependent Variable: rgdpna
Coefficient Correlationsa
Model
rnna
hc
emp
1
Correlations
rnna
1.000
-.386
-.622
hc
-.386
1.000
.349
emp
-.622
.349
1.000
Covariances
rnna
6.170E-5
-190.919
-2.376
hc
-190.919
3956043734.570
10660982.057
emp
-2.376
10660982.057
236264.177
a. Dependent Variable: rgdpna
Interpretation
Based on the obtained results, it is clear that the data is skewed, and its features are for data that comes from a normal distribution. From the regression analysis that has been executed, we can determine if the variables are linearly related. The obtained correlation coefficient is r=0.993. This indicates that there is a positive and very strong relationship that exists between the variables. This means that the real GDP is highly affected by the common stock, human capital and the number of people engaged. Additionally, the coefficient of determination is r-squared=0.986.
The value indicates that 98.6% of the variation in the real GDP is due to common stock, human capital and the number of people engaged. The p-value for the model is p<0.000, indicating that the model is significant. However, there are non-significant variables with the model despite the strong relationship existing between the model variables. Of the three independent variables, human capital emerges to be the most significant variable that affects the real GDP of a country
Findings and conclusion
The results show that the real GDP of any nation is positively affected by the human capital index. It is therefore essential for any government to focus on ensuring that human capital index is addressed. This is because unaddressed human capital may result in poor growth of the economy. The model indicates that the real GDP can be affected by various factors, and therefore it is recommended to establish more variables and determine their impact on the model. This will help in bettering the model and help in making well-informed decisions.
References
Aziz, R. N. A. R., & Azmi, A. (2017). Factors affecting gross domestic product (GDP) growth in Malaysia. International Journal of Real Estate Studies, 11(4), 61-67.
Yolanda, Y. (2017). Analysis of factors affecting inflation and its impact on human development index and poverty in Indonesia.