STAT222 Business Statistics

Department of Finance and Economics College of Business and Economics Qatar University
Business Statistics II - STAT222 Spring 2020

Foreign Direct Investment and Economic Growth

Economic theory suggests that foreign direct investment affect the economic growth (the growth of the Gross Domestic Product (GDP)) in developing countries. The objective of this project is to carry out a simple linear regression analysis to examine this theory. Your independent and dependent variables are the growth of the foreign direct investment and the economic growth (the growth of the Gross Domestic Product (GDP)) respectively.

Required Tasks:

  1. State the regression model and determine the least squares regression line.
  1. What sign did you expect the estimated parameter to have? Explain.
  1. Use the scatter diagram presented in figure 1 to comment on whether it appears that a linear model might be appropria
stat222 business statistics image 1

Figure 1. Scatter diagram

  1. Complete the table

Variable

Coefficient

Std. Error

t-Statistic

Prob.

C

0.825323

0.025088

………….

0.0000

FDI

0.395143

…………

79.13680

0.0000

R-squared

0.997928

Mean dependent var

2.799762

Adjusted R-squared

0.997769

S.D. dependent var

0.215471

S.E. of regression

0.010177

Akaike info criterion

-6.213784

Sum squared resid

0.001346

Schwarz criterion

-6.119377

Log likelihood

48.60338

Hannan-Quinn criter.

-6.214790

F-statistic

6262.633

Durbin-Watson stat

2.011334

Prob(F-statistic)

0.000000

Table 1. Estimation results

  1. Write the regression line.
  1. Conduct a test of the coefficient of correlation to determine at the 5% significance level whether FDI is related to the GDP, as the theory suggest
  1. Conduct a test of the regression slope to determine at the 5% significance level whether a positive and significant linear relationship exists between the two varia
  1. Does it appear that the error variable is normally distributed? Ex (Refer to the Histogram of the residuals presented in figure 2.
stat222 business statistics image 2

Figure 2. Histogram of the residuals