Use “Regression” under Excel’s Analysis Toolpack to regress the FDI Outflows ont

Question

Use “Regression” under Excel’s Analysis Toolpack to regress the FDI Outflows onto the FDI Inflows.

(10 marks) Determine and interpret the slope, the correlation coefficient and coefficient of determination from your regression output. Use bullet points.

(10 marks) Perform the appropriate hypothesis testing test to conclude if the linear model describe accurately the relationship between FDI Outflows and FDI Inflows.

in given table 2nd couclumn represent FDI inflows data for year 2010 and 3rd column represents FDI outflows for year 2010

Countries FDI -Inflows (% of GDP) for Year 2010 FDI -outflows (% of GDP) for Year 2010 Afghanistan 0.438725894 Albania 9.414123387 0.001585639 Algeria 1.414500815 American Samoa Andorra Angola -3.799534626 1.578145206 Antigua and Barbuda 7.981279809 Argentina 1.913311415 0.261639904 Armenia 6.08311401 0.088035804 Aruba Australia 2.70198663 2.167370691 Austria -6.762872176 -5.375686804 Azerbaijan 1.087668693 0.448055021 Bahamas 11.18578574 Bahrain Bangladesh 0.913645268 0.000257725 Barbados 16.27515818 8.268754337 Belarus 2.563918463 0.092116831 Belgium 15.53436004 10.19813891 Belize 6.884359535 0.080019794 Benin 1.672381517 Bermuda 3.642934165 Bhutan 1.252591032 Bolivia 3.165428526 -0.146594222 Bosnia and Herzegovina 1.396675034 0.263386507 Botswana 1.783163371 0.001812883 Brazil 2.32323061 0.554989397 Brunei Bulgaria 4.936495637 0.532666913 Burkina Faso 0.420932027 Burundi 0.048482085 Cambodia 6.961200809 0.183059849 Cameroon -0.002451949 -0.159259925 Canada 1.495645808 2.481261292 Cape Verde 6.777745704 -0.009078496 Cayman Islands Central African Rep. 3.578500647 Chad 10.2978459 Channel Islands Chile 7.095411622 4.110029277 China 3.122876006 1.014925126 Colombia 2.393319454 2.271376824 Comoros 1.735688252 Congo, Dem. Rep. 22.3610298 Congo, Rep. 23.45091576 Costa Rica 4.090344885 0.069144517 Cote d'Ivoire 1.834626222 Croatia 0.66975174 -0.23732348 Cuba Cyprus 8.152507976 4.339910836 Czech Rep. 3.499453576 0.915572455 Denmark -2.467086039 1.060923046 Djibouti Dominica 5.219177522 Dominican Rep. 3.140648596 Ecuador 0.288550805 Egypt 2.917207326 0.537017228 El Salvador -0.026208242 0.288950586 Equatorial Guinea 4.962238286 Eritrea 2.626347968 Estonia 8.009287411 0.662182415 Ethiopia 0.97005579 Faeroe Islands Fiji 6.150693489 0.182063162 Finland 2.970904138 4.472876661 France 1.315292344 3.296624473 French Polynesia Gabon 1.297005195 Gambia 4.632994267 Georgia 6.999932316 0.05048629 Germany 1.406095038 3.303175371 Ghana 7.822325594 Gibraltar Greece 0.142802392 0.322282745 Greenland Grenada 7.785579518 Guam Guatemala 2.139298656 0.057057676 Guinea 2.246934503 Guinea-Bissau 1.007234822 Guyana 12.11170752 Haiti 2.235557802 Honduras 5.177753783 -0.008996374 Hong Kong, China 31.66123825 42.50867629 Hungary -32.87173471 -35.56007412 Iceland 2.0479533 -19.72843648 India 1.398820306 0.761446159 Indonesia 1.892353666 0.37707403 Iran Iraq 1.736329359 Ireland 13.1091046 8.764276254 Isle of Man Israel 2.370650979 3.662541191 Italy 0.465488389 1.581851679 Jamaica 1.597484212 0.408523534 Japan -0.024893696 1.048251121 Jordan 6.17043984 0.103181196 Kazakhstan 7.162771665 5.245867254 Kenya 0.577030615 0.004900514 Kiribati 2.427118047 Korea, Dem. Rep. Korea, Rep. -0.014795711 1.895507071 Kosovo 8.661549633 Kuwait Kyrgyzstan 9.479429713 -0.000537243 Laos 3.821163575 Latvia 1.536880096 0.083299734 Lebanon 10.97230256 1.247622999 Lesotho 5.370758583 -0.104071621 Liberia 45.92071911 Libya Liechtenstein Lithuania 2.061495626 0.226600942 Luxembourg 389.7557204 347.1206141 Macao, China 12.62472534 -1.78622984 Macedonia, FYR 2.257621096 0.020659013 Madagascar 9.866189101 Malawi 2.770000613 Malaysia 3.855055026 5.682575959 Maldives 8.583633064 Mali 1.595902557 Malta 12.03926102 1.056228649 Marshall Islands 5.312247468 Mauritania 0.377154996 Mauritius 4.43287264 1.330702115 Mayotte Mexico 1.910669149 1.310014935 Micronesia, Fed. Sts. 3.378453808 Moldova 3.319620691 0.060425601 Monaco Mongolia 23.4613579 0.752038824 Montenegro 18.49741497 Morocco 1.366260305 0.638710526 Mozambique 8.230790694 -0.008082856 Myanmar Namibia 6.539317261 0.036255063 Nepal 0.558561943 0.00010496 Netherlands -2.001260236 6.321485455 New Caledonia New Zealand Nicaragua 7.754325317 Niger 17.06441438 Nigeria 2.986604739 0.451927845 Northern Mariana Islands Norway 2.81388052 2.934593912 Oman Pakistan 1.143215311 0.026573254 Palau 1.362419156 Panama 8.805574968 Papua New Guinea 0.305286786 0.002327472 Paraguay 1.87930579 0.039277218 Peru 4.666095016 0.13694485 Philippines 0.858261808 0.244000876 Poland 1.939331422 1.177998985 Portugal 0.645870539 -3.571658939 Puerto Rico Qatar Romania 1.819659294 -0.013611868 Russia 2.925201617 3.549259204 Rwanda 0.75221219 Saint Kitts and Nevis 18.46988929 Saint Lucia 9.182541945 Saint Martin Saint Vincent and the Grenadines 14.15255788 Samoa 0.127836758 San Marino Sao Tome and Principe 12.52224204 0.054474233 Saudi Arabia 4.960168663 0.89881644 Senegal 1.845112216 Serbia 3.488086592 0.490255164 Seychelles 17.86308399 0.656757787 Sierra Leone 4.545383456 Singapore 18.50794791 9.455377177 Slovak Republic 0.633843204 0.365569537 Slovenia 0.780590523 -0.155946413 Solomon Islands 35.05612303 0.337666536 Somalia South Africa 0.336423567 -0.044322236 Spain 1.752044916 1.460610615 Sri Lanka 0.965075881 0.086172535 Sudan 3.326142235 Suriname Swaziland 3.668870747 0.105648111 Sweden 1.275054061 7.007843483 Switzerland 4.111717904 12.41388905 Syria 2.483973883 Tajikistan 0.279901591 Tanzania 1.891520093 Thailand 3.038684982 1.733819116 Timor-Leste 39.89258203 Togo 1.302010624 Tonga 4.654132928 Trinidad and Tobago 2.666482599 Tunisia 3.162879974 0.149847196 Turkey 1.236987947 0.19935605 Turkmenistan 10.41463457 Turks and Caicos Islands Tuvalu 4.784566271 Uganda 4.803891378 Ukraine 4.708933891 0.533606673 United Arab Emirates 1.326497633 United Kingdom 2.341947746 1.314164979 United States 1.619457533 2.408701936 Uruguay 4.166162521 -0.015754447 Uzbekistan 2.108686887 Vanuatu 5.567057084 Venezuela 0.308538405 0.681642745 Vietnam 7.516900448 0.8456513 Virgin Islands (U.S.) West Bank and Gaza Yemen, Rep. 0.178229669 Zambia 6.431230675 1.782884863 Zimbabwe 1.409845608

Explanation / Answer

Foreign direct investment refers to direct investment equity flows in an economy. It is the sum of equity capital, reinvestment of earnings, and other capital. Direct investment is a category of cross-border investment associated with a resident in one economy having control or a significant degree of influence on the management of an enterprise that is resident in another economy. Ownership of 10 percent or more of the ordinary shares of voting stock is the criterion for determining the existence of a direct investment relationship. This series shows net outflows of investment from the reporting economy to the rest of the world, and is divided by GDP.

Description: The map below shows how Foreign direct investment, net outflows (% of GDP) varies by country. The shade of the country corresponds to the magnitude of the indicator. The darker the shade, the higher the value. The country with the highest value in the world is Cayman Islands, with a value of 247.90. The country with the lowest value in the world is Malta, with a value of -60.96.

Development Relevance: Private financial flows - equity and debt - account for the bulk of development finance. Equity flows comprise foreign direct investment (FDI) and portfolio equity. Debt flows are financing raised through bond issuance, bank lending, and supplier credits.

Limitations and Exceptions: FDI data do not give a complete picture of international investment in an economy. Balance of payments data on FDI do not include capital raised locally, an important source of investment financing in some developing countries. In addition, FDI data omit nonequity cross-border transactions such as intra-unit flows of goods and services. The volume of global private financial flows reported by the World Bank generally differs from that reported by other sources because of differences in sources, classification of economies, and method used to adjust and disaggregate reported information. In addition, particularly for debt financing, differences may also reflect how some installments of the transactions and certain offshore issuances are treated. Data on equity flows are shown for all countries for which data are available.

Statistical Concept and Methodology: Data on equity flows are based on balance of payments data reported by the International Monetary Fund (IMF). Foreign direct investment (FDI) data are supplemented by the World Bank staff estimates using data from the United Nations Conference on Trade and Development (UNCTAD) and official national sources. The internationally accepted definition of FDI (from the sixth edition of the IMF's Balance of Payments Manual [2009]), includes the following components: equity investment, including investment associated with equity that gives rise to control or influence; investment in indirectly influenced or controlled enterprises; investment in fellow enterprises; debt (except selected debt); and reverse investment. The Framework for Direct Investment Relationships provides criteria for determining whether cross-border ownership results in a direct investment relationship, based on control and influence. Distinguished from other kinds of international investment, FDI is made to establish a lasting interest in or effective management control over an enterprise in another country. A lasting interest in an investment enterprise typically involves establishing warehouses, manufacturing facilities, and other permanent or long-term organizations abroad. Direct investments may take the form of greenfield investment, where the investor starts a new venture in a foreign country by constructing new operational facilities; joint venture, where the investor enters into a partnership agreement with a company abroad to establish a new enterprise; or merger and acquisition, where the investor acquires an existing enterprise abroad. The IMF suggests that investments should account for at least 10 percent of voting stock to be counted as FDI. In practice many countries set a higher threshold. Many countries fail to report reinvested earnings, and the definition of long-term loans differs among countries. BoP refers to Balance of Payments.

Aggregation method: Weighted average

Periodicity: Annual

General Comments: Note: Data starting from 2005 are based on the sixth edition of the IMF's Balance of Payments Manual (BPM6).

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