# Question

Is economic growth in the developing world related to growth in the industrialized countries? Here’s a scatterplot of the growth (in % of Gross Domestic Product) of 180 developing countries vs. the growth of 33 developed countries as grouped by the World Bank (www. ers.usda.gov/data/macroeconomics). Each point represents one of the years from 1970 to 2011. The output of a regression analysis follows.

Dependent variable: GDP Growth Developing Countries

5753150 2015O5AM 202 142 167506

R2 =31.64% s =1.201

Variable .............. Coefficient

Intercept .............. 3.38

GDP Growth Developed Countries ... 0.468

a) Check the assumptions and conditions for the linear model.

b) Explain the meaning of R2 in this context.

c) What are the cases in this model?

Dependent variable: GDP Growth Developing Countries

5753150 2015O5AM 202 142 167506

R2 =31.64% s =1.201

Variable .............. Coefficient

Intercept .............. 3.38

GDP Growth Developed Countries ... 0.468

a) Check the assumptions and conditions for the linear model.

b) Explain the meaning of R2 in this context.

c) What are the cases in this model?

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