The correlation coefficient between GDP per capita and openness from 2003 to 2015 for Italy is...

The correlation coefficient between GDP per capita and openness from 2003 to 2015 for Italy is 0.534. The correlation coefficient between GDP per capita and openness from 2003 to 2015 for Sweden is 0.5927.

Using the data above, explain in up to 200 words the relationship between openness and economic development for each of the two countries

Expert Solution

It has been given that the correlation coefficient between GDP per capita and openness from 2003 to 2015 for Italy is 0.534, and the correlation coefficient between GDP per capita and openness from 2003 to 2015 for Sweden is 0.5927.

Correlation coefficient shows the degree to which two variables are correlated. The closer is the value of correlation coefficient to 1 the greater is the association. The positive value of the correlation coefficient for Italy and Sweden shows that GDP per capita and openness are positively correlated meaning the values of the two increases or decreases in tandem.

However, correlation coefficient doesn’t show cause and effect relation. In other words, based on the value of correlation coefficient of 0.534 one cannot say that increase in GDP per capita by 1% raises the openness by 0.534 or increase in openness by 1% raises the GDP per capita by 0.534. Correlation coefficient only shows the degree of association between two variables.

Based on the values of correlation coefficient for Italy and Sweden one can say that GDP per capita and openness are comparatively closely positively associated with each other in both the countries with degree of association being a bit higher in Sweden.

Rahul Sunny answered 1 year ago

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