Term Paper II
Team Final Report
Due: June 21, 2021
Course Name and Number: MBAF 504: Economics from a Business Perspective
This assignment is prepared to check your understanding of economic growth and disparities
etween countries’ levels of development based on empirical evidence. You are expected to
extract the data for this purpose of analysis from relevant credible sources. Originality and clarity
in your work are highly valued. This work accounts for 25% of your total grading of the course.
Long-run Economic Growth
Extract the data for GDP per capita of all sovereign countries for selected years of 1960, 1990
and 2020 from global databases (like the IMF or World Bank) and perform a convergence data
analysis based on the following questions. You can use any data analysis programming
language that you are convenient with for this term paper. You can also use the programing
language which we used in the class, Gretl, accessible for free download at
http:
gretl.sourceforge.net .
In this work, focus on the following key contents:
1. Introduction
● Discuss Long-Run Economic Growth
● Will the poor countries catch up to rich countries by growing faster?
2. Background
● Provide a summary statistics table for all countries for the years from 1960 to 2020.
● Select 10 sample countries from the data (5 poor and 5 rich) and explain what important
key historic or economic issues have happened during the years under consideration and
how is this reflected in their per capita GDP, inflation, unemployment rate and the policy
measures in these countries during this time? Note, the major economic shocks to
consider during this time could be financial crisis, pandemic, war, political instability,
hyperinflation, etc.
3. Data Analysis
● Using data of GDP per capita provided in the dataset, plot histograms of GDP for all the years
etween 1960 and 2020 and describe how the distribution of income evolves. If there are any
http:
gretl.sourceforge.net
http:
gretl.sourceforge.net
outliers, omit them. In a case where you encounter any outlier, then provide economic intuition
for evaluating these countries as outliers.
● Calculate the Growth rate of GDP per capita for each of the countries in the years unde
consideration. Show boxplots of incomes for all the countries in each year. What happened? Is
there any evidence for convergence? Discuss the notions of conditional and unconditional
convergence in this regard (Hint.: Use logs instead of levels).
● Split the data into two groups of poor and rich. The split should be done according to the
median income in 1990. Then show boxplots of incomes for both groups in each year. What
happened? Is there any evidence for convergence? (Hint.: Use logs instead of levels. Start with
splitting the sample: poor in 1960, 1990 and 2020, then the same for the rich. Plot boxplots fo
each).
4. Extract the GDP, employment rate, investment, education, political stability or othe
socio-political, institutional and economic factors for all the economies. Run the regression
analysis both for the conditional and unconditional convergence for a sample of developed
countries and developed countries, each separately and an aggregate analysis for the global
economy. The selection for the development level categories can follow regional divisions o
international organization membership, etc…. (For e.g. OECD, Western Economies, OPEC, BRICS,
etc) . Plot the respective convergence analysis scatter plots depicting the convergence behaviour.
(Use the average per capita GDP growth between 1990 and 2020 as a dependent variable and
GDP growth rate in 1960 as the independent variable for the unconditional regression analysis.
For the conditional convergence, use additional explanatory variables in addition to the GDP
growth rate in 1960 ).
NB:
a) Unconditional convergence: (e.g. for the years between XXXXXXXXXX)
ΔGDP XXXXXXXXXX =α + βΔGDP1960
lnGDP XXXXXXXXXX =α + βlnGDP1960
) Conditional convergence (e.g. for the years between XXXXXXXXXX)
ΔGDP XXXXXXXXXX =α + βΔGDP1960 +γX1960
where X1960 is a set of country-specific controls (education, fiscal and monetary policy, competition
level, etc.) - we compare countries with similar starting characteristics
5. Discussion and Implications
Explain the structure of the data provided and how it characterizes the countries unde
consideration over the years that are taken into account. Using your own words, explain why you
elieve that the poor countries in the data can (cannot) catch up with the rich countries? You
argument should be based on the convergence analysis you made from the data. You can support
your argument by citing relevant works that are in line with your analysis.
6. Conclusion
In summing up your analysis; provide a summary of the main points in your paper in connection
with the macroeconomic theories covered in the class..
NB: Please, provide a proper citation of any resource used in this work. Use APA Standard for the
format of your final submission.