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THE CALCULATIONS HAVE TO BE MADE VIA THE SOFTWARE: R The objective of the evaluation is to carry out a data-driven examination of the economic

THE CALCULATIONS HAVE TO BE MADE VIA THE SOFTWARE: R The objective of the evaluation is to carry out a data-driven examination of the economic prosperity of countries.

Why are some countries rich and others poor? We are going to study several possible drivers of economic development: countries' human capital; countries' efforts to develop new technologies; countries' business environments; and, countries' political institutions.

The file named data_week_8.csv comprises information sourced from the World Bank for 217 nations from the year 2017. Notably, the variables captured in this data file include:

  • GDP: GDP per capita, PPP (constant 2017 international $); this represents the average income generated per individual in a nation for a specific year.
  • LE: Life expectancy at birth (in years); this indicates human capital in terms of health and overall well-being.
  • RDE: Spending on research and development (as a percentage of GDP); this highlights a nation's commitment to technological advancements.
  • CoB: Expense to initiate a business (as a percentage of GNI per capita); this can be seen as a gauge for how business-friendly a country is, akin to assessing bureaucratic hurdles or "red tape."
  • CPIA: CPIA score for transparency, responsibility, and public sector corruption (with 1 indicating low and 6 indicating high); this evaluates the integrity and efficiency of governmental institutions.

The analysis should address the following:

Question A:

Investigate the dependent variable (GDP per capita):

1. Calculate the descriptive statistics for the outcome variable?

2. How do you interpret the disparity between the median and mean values of the dependent variable? Plot a histogram for GDP per capita and save the graphic (ensure you add this to the answers - and do the same for any subsequent request for diagrams or tables).

3. What's the maximum value? Which nation has the top spot in the dataset in terms of wealth? How do you interpret this? What does it indicate about the income metric we've chosen?

Question B:

Analyze the explanatory variables:

1. Construct a table showing correlations between the dependent variable and all the independent variables. What's the relationship between RDE and GDP? Is this expected? 2. Observe the direct correlation between GDP and RDE. How does the relationship appear now? Can you speculate on the reasons behind it? 3. Inspect and present the correlations between each pair of explanatory variables. Which pair indicates the highest risk of collinearity?

Question C:

Based on the data given:

1. Evaluate the OLS assumptions required prior to initiating the empirical analysis. If these aren't met, detail and explain the necessary measures to address these issues.

2. Determine the most fitting econometric model for GDP per capita. Which independent variables account for a significant proportion of the variation in the dependent variable? Justify why certain independent variables are chosen for the model over others.

3. After deducing the optimal OLS model, revisit the OLS assumptions. If these post-estimation assumptions are not met, outline and explain the remedial steps.

4. What insights does the model provide regarding the factors influencing GDP per capita?

5. In the chosen econometric model for GDP per capita, identify the y-intercept. What does this value signify in practical terms? Is the y-intercept plausible in terms of representing a potential real-world scenario?

6. Are there any variables left out that should be taken into account?

7. Highlight any potential constraints or limitations in our empirical analysis that need consideration.

THE CALCULATIONS HAVE TO BE MADE VIA THE SOFTWARE: R What are the R commands used to arrive at these results? (Please send the screenshots here, it will be really helpful) While some variables are pegged to GDP and others to GNI, constraints in data accessibility prevent a consistent output/income measure in this context. However, for this analysis, you're permitted to overlook the disparities between GNI and GDP.

The analysis should address the following:

Using the given data, develop the most suitable econometric model for GDP per capita. What insights does this model offer about the factors influencing GDP per capita?

Ensure comprehensive elaboration. For instance, you might showcase familiarity with potential shortcomings of the study (stemming from the data or methodology) or display a deep understanding of the methodology by accurately decoding the findings.

Country Name

Country Code

GDP

LE

RDE

CoB

CPIA

Afghanistan

AFG

2058.400221

64.13

82.3

2

Albania

ALB

12770.97504

78.333

12

Algeria

DZA

11737.41616

76.499

0.54243

12.5

American Samoa

ASM

Andorra

AND

Angola

AGO

7310.896589

60.379

17.4

Antigua and Barbuda

ATG

19840.28404

76.752

9.1

Argentina

ARG

23597.11775

76.372

0.54152

10.4

Armenia

ARM

12115.13929

74.797

0.22788

0.9

Aruba

ABW

38897.12267

76.01

Australia

AUS

48482.64746

82.5

1.87372

0.7

Austria

AUT

54169.96399

81.64390244

3.05212

5.1

Azerbaijan

AZE

14121.40694

72.693

0.18468

1.6

Bahamas, The

BHS

36298.448

73.554

13.8

Bahrain

BHR

47709.77802

77.032

1

Bangladesh

BGD

4160.703325

72.052

22.9

2.5

Barbados

BRB

15789.04116

78.981

7.6

Belarus

BLR

18280.19892

74.12926829

0.58411

0.6

Belgium

BEL

50442.27054

81.49268293

2.70234

5.6

Belize

BLZ

7193.63431

74.365

34.6

Benin

BEN

3044.517156

61.174

3.7

3.5

Bermuda

BMU

81834.95587

81.44195122

Bhutan

BTN

11142.47467

71.129

3.9

4.5

Bolivia

BOL

8423.69756

70.945

46.6

Bosnia and Herzegovina

BIH

13753.83205

77.128

0.20048

16.1

Botswana

BWA

17253.6875

68.812

0.7

Brazil

BRA

14524.61354

75.456

1.26326

4.8

British Virgin Islands

VGB

Brunei Darussalam

BRN

60994.53156

75.585

1.1

Bulgaria

BGR

21387.27664

74.81463415

0.75239

1.2

Burkina Faso

BFA

2044.386987

60.768

0.70072

42.6

3.5

Burundi

BDI

773.5728587

60.898

33.9

1.5

Cabo Verde

CPV

6643.179892

72.57

15.4

4

Cambodia

KHM

3928.373934

69.289

51.3

2

Cameroon

CMR

3554.521539

58.511

35.8

2.5

Canada

CAN

48317.09658

81.9

1.67165

0.4

Cayman Islands

CYM

69753.08972

Central African Republic

CAF

912.8030453

52.24

154.7

2.5

Chad

TCD

1587.032328

53.712

171.3

2.5

Channel Islands

CHI

82.766

Chile

CHL

24470.70362

79.909

0.35518

5.9

China

CHN

14344.42124

76.47

2.14512

1.5

Colombia

COL

14171.3205

76.925

0.24294

14

Comoros

COM

3032.262133

63.912

84.1

2.5

Congo, Dem. Rep.

COD

1059.810762

60.026

28.6

2

Congo, Rep.

COG

4241.858343

63.954

77.7

2

Costa Rica

CRI

20347.03477

79.914

0.42336

8.6

Cote d'Ivoire

CIV

4830.750515

57.017

16.5

3

Croatia

HRV

26800.11898

77.82682927

0.8645

7.2

Cuba

CUB

78.662

0.43066

Curacao

CUW

25475.48966

78.01707317

Cyprus

CYP

38050.85774

80.672

0.56092

12.4

Czech Republic

CZE

38824.88792

78.97804878

1.79079

1

Denmark

DNK

55356.68078

81.10243902

3.046

0.2

Djibouti

DJI

4885.205039

65.893

58.8

2.5

Dominica

DMA

11304.04333

15.5

4

Dominican Republic

DOM

16735.36442

73.689

14.5

Ecuador

ECU

11617.91222

76.584

34

Egypt, Arab Rep.

EGY

11014.48648

71.656

0.67941

22.2

El Salvador

SLV

8454.055551

72.872

0.18115

41.4

Equatorial Guinea

GNQ

22550.95816

58.061

103.4

Eritrea

ERI

65.538

27

2

Estonia

EST

33856.18111

78.09268293

1.28867

1.2

Eswatini

SWZ

8408.043122

58.319

16.4

Ethiopia

ETH

2021.562908

65.872

0.27441

57.8

3

Faroe Islands

FRO

82.29512195

Fiji

FJI

13429.30062

67.252

16.9

Finland

FIN

47570.13358

81.63170732

2.7569

0.8

France

FRA

44577.06457

82.57560976

2.20557

0.7

French Polynesia

PYF

77.251

Gabon

GAB

15006.84404

65.839

7.2

Gambia, The

GMB

2072.646833

61.44

128.2

2

Georgia

GEO

13589.70739

73.414

0.29104

2.5

Germany

DEU

52952.87502

80.99268293

3.03763

6.8

Ghana

GHA

4983.688856

63.463

17.5

3.5

Gibraltar

GIB

Greece

GRC

28645.04362

81.28780488

1.13109

1.6

Greenland

GRL

70.62243902

Grenada

GRD

16217.49985

72.388

15.3

4

Guam

GUM

79.631

Guatemala

GTM

8322.21681

73.81

28

22.9

Guinea

GIN

2417.803795

60.706

62.6

2.5

Guinea-Bissau

GNB

1925.237737

57.673

99.9

1.5

Guyana

GUY

12005.4051

69.624

9.8

3

Haiti

HTI

2980.960584

63.29

200.2

2.5

Honduras

HND

5561.994542

74.898

0.04

39.7

3

Hong Kong SAR, China

HKG

59849.24818

84.6804878

0.79925

1.1

Hungary

HUN

29465.12624

75.81707317

1.3486

5.4

Iceland

ISL

55638.49206

82.66097561

2.10444

1.8

India

IND

6182.922109

69.165

0.66584

15

Indonesia

IDN

10935.63172

71.282

0.2381

11

Iran, Islamic Rep.

IRN

14535.87358

76.271

0.83027

1.4

Iraq

IRQ

10719.01222

70.294

0.04455

43.3

Ireland

IRL

78655.62619

82.15609756

0.2

Isle of Man

IMN

Israel

ISR

38833.97343

82.55121951

4.81602

3.2

Italy

ITA

41581.12079

82.94634146

1.37744

14.1

Jamaica

JAM

9600.104746

74.267

4.8

Japan

JPN

40966.59322

84.0997561

3.21254

7.5

Jordan

JOR

10003.57498

74.292

24.2

Kazakhstan

KAZ

24862.96612

72.95

0.12972

0.3

Kenya

KEN

4046.234771

65.909

26.3

3

Kiribati

KIR

2235.694985

67.851

40.2

3.5

Korea, Dem. People's Rep.

PRK

71.91

Korea, Rep.

KOR

40957.41806

82.62682927

4.55324

14.6

Kosovo

XKX

10530.48166

71.99512195

1

3

Kuwait

KWT

50855.55286

75.311

0.08118

1.7

Kyrgyz Republic

KGZ

5046.691535

71.2

0.10707

2.1

3

Lao PDR

LAO

7257.812107

67.277

7

2.5

Latvia

LVA

28650.00776

74.62926829

0.51012

1.7

Lebanon

LBN

15987.65434

78.833

42

Lesotho

LSO

2668.291425

52.947

7.7

3

Liberia

LBR

1515.64454

63.295

15.7

3

Libya

LBY

13238.00054

72.52

30.3

Liechtenstein

LIE

83.74634146

Lithuania

LTU

33761.87124

75.4804878

0.89808

0.6

Luxembourg

LUX

112308.1738

82.09512195

1.30327

1.7

Macao SAR, China

MAC

126183.6761

83.989

0.1715

Madagascar

MDG

1584.424475

66.311

0.01465

35.7

2.5

Malawi

MWI

1446.473062

63.279

44.6

2.5

Malaysia

MYS

26661.50742

75.828

12.7

Maldives

MDV

18058.58108

78.325

4.7

2.5

Mali

MLI

2246.797421

58.452

0.29175

58.4

3

Malta

MLT

42644.05085

82.34634146

0.58275

7.4

Marshall Islands

MHL

3706.253158

11.9

3.5

Mauritania

MRT

5077.185987

64.464

19.3

3

Mauritius

MUS

21415.11611

74.51463415

0.36636

1

Mexico

MEX

19721.26098

74.947

0.32829

17

Micronesia, Fed. Sts.

FSM

3490.130487

67.618

141.7

3.5

Moldova

MDA

11651.31745

71.717

0.25374

5.6

2.5

Monaco

MCO

Mongolia

MNG

11311.76113

69.509

0.13475

1.4

3.5

Montenegro

MNE

19682.28335

76.667

0.34898

1.5

Morocco

MAR

7312.056779

76.218

8

Mozambique

MOZ

1283.65987

59.309

92.9

2.5

Myanmar

MMR

4739.915445

66.558

0.03186

40.1

2.5

Namibia

NAM

10171.42149

63.021

11.4

Nauru

NRU

12975.39238

Nepal

NPL

3565.197807

70.169

27.4

3

Netherlands

NLD

55088.6338

81.76097561

1.98308

4.4

New Caledonia

NCL

77.53902439

New Zealand

NZL

42285.3199

81.65853659

1.3657

0.3

Nicaragua

NIC

6004.02858

74.068

65.4

2.5

Niger

NER

1163.687784

61.599

8.3

3

Nigeria

NGA

5190.356127

53.95

29.2

3

North Macedonia

MKD

15649.92742

75.589

0.35525

3.4

Northern Mariana Islands

MNP

Norway

NOR

64050.75617

82.6097561

2.09343

0.9

Oman

OMN

29077.3636

77.393

0.2276

3.2

Pakistan

PAK

4571.205078

66.947

0.23597

7.9

3

Palau

PLW

17826.39361

2.9

Panama

PAN

30446.83723

78.149

0.14699

6.5

Papua New Guinea

PNG

4285.628756

64.01

20.3

3

Paraguay

PRY

12590.54844

73.992

0.14883

58.2

Peru

PER

12506.52938

76.286

0.12101

7.5

Philippines

PHL

8120.868793

70.952

19.7

Poland

POL

30064.50348

77.75365854

1.03445

12

Portugal

PRT

33044.71674

81.42439024

1.32833

2.1

Puerto Rico

PRI

34363.74599

79.63453659

0.8

Qatar

QAT

91738.75279

79.981

6.3

Romania

ROU

27141.91933

75.3097561

0.5039

0.4

Russian Federation

RUS

25926.44385

72.45146341

1.10656

1.1

Rwanda

RWA

1975.248661

68.341

44.6

3.5

Samoa

WSM

6480.845407

73.046

7.3

4

San Marino

SMR

58867.01336

9.1

Sao Tome and Principe

STP

3952.945394

69.933

13.2

3.5

Saudi Arabia

SAU

47306.22232

74.874

6.8

Senegal

SEN

3203.906368

67.38

33.8

3.5

Serbia

SRB

16611.01686

75.53902439

0.87353

2.3

Seychelles

SYC

27242.65603

74.3

13.2

Sierra Leone

SLE

1642.60747

53.895

10.3

3

Singapore

SGP

95350.43567

83.09512195

1.94431

0.5

Sint Maarten (Dutch part)

SXM

37914.12297

Slovak Republic

SVK

30077.84553

77.16585366

0.88267

1.1

Slovenia

SVN

36505.67722

81.02926829

1.86581

0

Solomon Islands

SLB

2663.939508

72.645

28.9

3

Somalia

SOM

867.4542909

56.709

203.6

1.5

South Africa

ZAF

12701.34893

63.538

0.83215

0.2

South Sudan

SSD

57.365

305

1.5

Spain

ESP

39528.92539

83.28292683

1.2058

4.1

Sri Lanka

LKA

12584.10479

76.648

10.4

St. Kitts and Nevis

KNA

25360.09102

7.2

St. Lucia

LCA

14945.73328

75.907

21.5

4.5

St. Martin (French part)

MAF

79.62195122

St. Vincent and the Grenadines

VCT

12245.12634

72.3

15.8

4

Sudan

SDN

4327.782553

64.881

27.8

1.5

Suriname

SUR

18283.68839

71.463

94

Sweden

SWE

51947.95425

82.4097561

3.39676

0.5

Switzerland

CHE

69103.57026

83.55121951

3.37286

2.3

Syrian Arab Republic

SYR

70.967

7.9

Tajikistan

TJK

3252.932655

70.647

0.11536

19.3

2.5

Tanzania

TZA

2530.603317

64.479

48.1

3

Thailand

THA

17422.95235

76.683

1.00403

6.2

Timor-Leste

TLS

3145.483121

69.007

0.5

2.5

Togo

TGO

2012.240693

60.489

66

3

Tonga

TON

6467.124278

70.701

7.1

3.5

Trinidad and Tobago

TTO

26342.61666

73.245

0.09204

0.8

Tunisia

TUN

10605.29488

76.31

4.6

Turkey

TUR

27913.81872

77.161

0.96105

15.9

Turkmenistan

TKM

14205.02651

67.956

Turks and Caicos Islands

TCA

27060.58966

Tuvalu

TUV

3896.748473

3.5

Uganda

UGA

2074.652436

62.516

42.6

2

Ukraine

UKR

11871.12362

71.78097561

0.44839

0.8

United Arab Emirates

ARE

67183.60531

77.647

13.4

United Kingdom

GBR

45744.71049

81.25609756

1.69829

0

United States

USA

60109.65573

78.53902439

2.81741

1.1

Uruguay

URY

23009.87423

77.632

0.48393

22.5

Uzbekistan

UZB

6518.804687

71.388

0.15566

3.1

2

Vanuatu

VUT

3081.835198

70.172

44.4

3

Venezuela, RB

VEN

72.246

352.2

Vietnam

VNM

7155.443187

75.241

0.52674

6.5

Virgin Islands (U.S.)

VIR

79.36829268

West Bank and Gaza

PSE

6401.740891

73.74

45

Yemen, Rep.

YEM

66.086

73.5

1.5

Zambia

ZMB

3485.02178

63.043

34.2

3

Zimbabwe

ZWE

3274.611198

60.812

110

2

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