Question
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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