Relationship Between Net Migration And Economic Growth

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Introduction According to the Solow model, the higher the country’s rate of population growth, the lower its income (GDP per capita) and therefore cause a decrease in economic growth. Therefore, net migration plays an important role in effect of economic growth. But, immigrants may have higher average human capital than natives and emigrants which might increase the economic growth if this is sufficient to offset the dilution of physical capital. The aim of this report is to investigate the relationship between net migration and economic growth and in particular to know whether there was a positive or negative effect of net migration (defined as the number of immigrants deduct the number of emigrants) between year 2000 and 2010, relative…show more content…
Therefore, two-tail hypothesis testing has applied to test the effect of both variables, the null and alternative hypothesis are below: H0: β1= 0 –There is no linear relationship between two variables H1: β1 ≠ 0 – There is a linear relationship between two variables Excel and a significance level of 5% was used to analyse the hypothesis (α=0.05). Result Chart 1 annual growth rate against net migration rate 2000-2010(all data from sample) Country Extreme point (%) Equatorial Guinea 23.19826168 Outlier (%) Qatar 173.05 United Arab Emirates 153.31 Bahrain 65.38 Kuwait 33.64 Table 1: Extreme point and outlier of countries on the scatter plot Table above shows the extreme point and outlier of countries. As both extreme point and outlier exists, they may have strong influence on the fitted regression line since the linear regression model is based on minimizing the sum of squared errors. Chart 2: annual growth rate against net migration net 20000-2010 (extreme point and outliers excluded) As there is not much difference for chart 1 and 2, therefore, results below used chart 1 analyse. The regression equation is: net m̂igration rate= 7.958 - 0.593 annual growth rate b0=0.07958 means that 7.958% is the portion of net migration not explained by the dependent variable (annual growth rate). B1 = -0.00593 indicates
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