Question

Explain in up to 200 words the relationship between Openness and economic development by calculating the correlation coefficient between GDP per capita (proxy for economic development) and Openness for Paraguay and Poland, respectively. [Here you have to use the CORREL command in Excel].

Country Name	Country Code	Series Name	Series Code	2001 [YR2001]	2002 [YR2002]	2003 [YR2003]	2004 [YR2004]	2005 [YR2005]	2006 [YR2006]	2007 [YR2007]	2008 [YR2008]	2009 [YR2009]	2010 [YR2010]	2011 [YR2011]	2012 [YR2012]	2013 [YR2013]	2014 [YR2014]
Paraguay	PRY	Exports of goods and services (current US$)	NE.EXP.GNFS.CD	3459319570	3402825624	3625989129	4371893087	5083809323	6252319090	7818347667	9993980610	8210295841	11036468064	13186264509	12278348692	14356651476	13954911448
Paraguay	PRY	GDP (current US$)	NY.GDP.MKTP.CD	7662595076	6325151760	6588103836	8033877360	8734653809	10646157920	13794910634	18504130753	15929902138	20030528043	25099681461	24595319574	28965906502	30881166852
Paraguay	PRY	GDP per capita (current US$)	NY.GDP.PCAP.CD	1417	1148	1175	1409	1507	1810	2312	3060	2600	3226	3988	3856	4480	4713
Paraguay	PRY	GINI index (World Bank estimate)	SI.POV.GINI	55	57	56	53	51	54	52	51	50	52	53	48	48	52
Paraguay	PRY	Imports of goods and services (current US$)	NE.IMP.GNFS.CD	2727373823	2298406126	2623501714	3307792347	4018039423	5221045741	6461917817	9166237324	7130137358	10313046052	12621883682	11979621541	12983600420	13242370791
Poland	POL	Exports of goods and services (current US$)	NE.EXP.GNFS.CD	51878648721	57137009804	72632296220	87410323710	105952277925	130565028203	165538367008	202086584758	163740453116	191967370760	225042181278	222344181762	242809098962	259386390289
Poland	POL	GDP (current US$)	NY.GDP.MKTP.CD	190521263343	198680637255	217518642325	255102252843	306134635594	344826430298	429249647595	533815789474	440346575958	479257883742	528725113046	500284003684	524201151607	545075908846
Poland	POL	GDP per capita (current US$)	NY.GDP.PCAP.CD	4981	5197	5694	6681	8021	9041	11260	14001	11542	12598	13891	13144	13780	14340
Poland	POL	GINI index (World Bank estimate)	SI.POV.GINI	33	34	35	35	35	34	34	34	34	33	33	32	33	32
Poland	POL	Imports of goods and services (current US$)	NE.IMP.GNFS.CD	58766945944	63908088235	78406788377	94256069554	109183717624	137680257857	180703003578	228993441806	167514280213	201543256955	235386043059	224546822229	232598709188	251529270071

Answer 1

Paraguay
Exports of goods and services (current US$)	GDP (current US$)	GDP per capita (current US$)	GINI index (World Bank estimate)	Imports of goods and services (current US$)	Openness = (X+M)/GDP
3459319570	7662595076	1417	55	2727373823	0.81
3402825624	6325151760	1148	57	2298406126	0.90
3625989129	6588103836	1175	56	2623501714	0.95
4371893087	8033877360	1409	53	3307792347	0.96
5083809323	8734653809	1507	51	4018039423	1.04
6252319090	10646157920	1810	54	5221045741	1.08
7818347667	13794910634	2312	52	6461917817	1.04
9993980610	18504130753	3060	51	9166237324	1.04
8210295841	15929902138	2600	50	7130137358	0.96
11036468064	20030528043	3226	52	10313046052	1.07
13186264509	25099681461	3988	53	12621883682	1.03
12278348692	24595319574	3856	48	11979621541	0.99
14356651476	28965906502	4480	48	12983600420	0.94
13954911448	30881166852	4713	52	13242370791	0.88
		Correlation between GDP per capita and openness	0.08

Poland
Exports of goods and services (current US$)	GDP (current US$)	GDP per capita (current US$)	GINI index (World Bank estimate)	Imports of goods and services (current US$)	Openness = (X+M)/GDP
51878648721	1.90521E+11	4981	33	58766945944	0.58
57137009804	1.98681E+11	5197	34	63908088235	0.61
72632296220	2.17519E+11	5694	35	78406788377	0.69
87410323710	2.55102E+11	6681	35	94256069554	0.71
1.05952E+11	3.06135E+11	8021	35	1.09184E+11	0.70
1.30565E+11	3.44826E+11	9041	34	1.3768E+11	0.78
1.65538E+11	4.2925E+11	11260	34	1.80703E+11	0.81
2.02087E+11	5.33816E+11	14001	34	2.28993E+11	0.81
1.6374E+11	4.40347E+11	11542	34	1.67514E+11	0.75
1.91967E+11	4.79258E+11	12598	33	2.01543E+11	0.82
2.25042E+11	5.28725E+11	13891	33	2.35386E+11	0.87
2.22344E+11	5.00284E+11	13144	32	2.24547E+11	0.89
2.42809E+11	5.24201E+11	13780	33	2.32599E+11	0.91
2.59386E+11	5.45076E+11	14340	32	2.51529E+11	0.94
		Correlation between GDP per capita and openness	0.93

Openness and economic development have positive relationship in both Paraguay and Poland. Paraguay’s correlation coefficient of 0.08 which indicates that the relationship between openness and economic development is a weak one, Whereas Poland’s correlation coefficient = 0.93 which indicates an incredibly strong relationship, it is very close to the perfect correlation.