Is the Economy of China Growing Faster Than That of the United States - Case Study Example

Name: Professor: Subject: Statistics and Research Methods Date: Is the economy of China growing faster than that of United States? Introduction This research intends to assess whether the economy of China is growing faster than the economy of United States. The topic is relevant because of the recent tendency by most economies across the globe to trade with China. Contrary to predictions made by economist, Chinese economy has been growing by average of about 10% compared with 0.5% growth rate in United States. It is also important to note that China stocks have been growing annually at an average of 7% even during the 2008 financial crisis. In 1978, China reformed its market by shifting to market based economy from centrally planned. The impact of the shift was an unprecedented economic and social development. With an average GDP of 10%, the economy has improved lives of many Chinese. The hypothesis for the research is that the economy of China, in terms of annual GDP growth rate, is growing faster than that of United States. Data collection The data for the research was obtained from secondary sources published by the World Bank Group. While pursuing its role in financial and technical assistance, the World Bank publishes economic data about countries around the globe. The data is essential in understanding performance of different economies. Gross Domestic Product annual growth rate was obtained by accessing the data section of World Bank website. GDP annual growth rate of China and United States were filtered out from the excel data source. The resulting data was applied in conducting analysis regarding economic performance of China and United states for a period starting from 1964 to 2013. Graphs and summary statistics (Source: “The World Bank Group”, n.p) Outliers Boundaries for outliers for data on China: Looking at the data, China has outliers comprising of . This shows existence of periods of extremely low and extremely high growth rates. Boundaries for outliers for data of United States: The outliers for United States are . This is an indicator that United States does not have occasions of extremely high growth rates. There are only periods extremely low performances. Summary statistics The minimum: China had minimum GDP growth rate of -5.7 in 1968 compared with United States whose minimum rate was -2.8024 in 2009. The United States experienced this minimum rate during the global financial crisis. It was during this period that China performed well registering a growth rate of approximately 9%. The maximum: According to the summary statistics, the highest GDP growth rate was 19.4 for China and 7.25898 for United States. This confirms that China performed better compared with United States in terms of maximum GDP growth rate. The median: China and United States had median values of 9.29 and 3.32 respectively. As a measure of central tendency, the median values express the fact that China performed well in overall terms compared with United States. The first quartile: In the case of China, implies that 25% of the data falls below 7.6572 compared with for United States. Comparing the two values, it is evident that China performed better economically. The third quartile: China had a compared with for United States. The statistic shows that 75% of the data fell below the given third quartile value. It points out that China is still doing well economically. Boxplots In a study by LeBlanc (204), boxplots summarizes the distribution of data. This is plotted as follows: By observation, the distribution is skewed to the right. The distribution is skewed to the right as observed from the box plot above. The side-by-side comparison displayed below sends a message that China has undergone period of extremely low GDP growth rate as well as periods of extremely high GDP growth rate. On the other hand, the U.S.A has only gone through periods of extremely low GDP growth rates. Country Extremely low Extremely high China United States The normal probability plot The plot is developed by applying Cunnanes formula given by: United States China Ordered for x-axis Ordered for x-axis i Y-axis probability position: -2.8024 -5.7000 1 1.2438 -1.9106 -4.1000 2 3.2338 -0.5168 -1.6000 3 5.2239 -0.2904 2.3000 4 7.2139 -0.2446 3.8000 5 9.2040 -0.1985 3.8390 6 11.1940 -0.0727 4.0632 7 13.1841 0.9487 5.2431 8 15.1741 1.7762 7.0000 9 17.1642 1.7899 7.5729 10 19.1542 1.8472 7.6000 11 21.1443 1.8765 7.6198 12 23.1343 1.9187 7.6526 13 25.1244 2.5000 7.6712 14 27.1144 2.5073 7.8333 15 29.1045 2.5949 7.8414 16 31.0945 2.6666 7.9000 17 33.0846 2.7186 8.3003 18 35.0746 2.7450 8.7000 19 37.0647 2.7790 8.8464 20 39.0547 2.7909 9.0569 21 41.0448 3.1000 9.0821 22 43.0348 3.1755 9.1789 23 45.0249 3.2068 9.2142 24 47.0149 3.2919 9.2970 25 49.0050 3.3512 9.2999 26 50.9950 3.4615 9.6347 27 52.9851 3.5119 10.0085 28 54.9751 3.5552 10.0254 29 56.9652 3.6809 10.0850 30 58.9552 3.7959 10.2000 31 60.9453 3.7980 10.4470 32 62.9353 4.0365 10.7000 33 64.9254 4.0907 10.8530 34 66.9154 4.2036 10.9250 35 68.9055 4.2393 11.2806 36 70.8955 4.4498 11.3100 37 72.8856 4.4874 11.5833 38 74.8756 4.6090 11.6699 39 76.8657 4.6327 12.6765 40 78.8557 4.8000 13.0807 41 80.8458 4.8465 13.4662 42 82.8358 5.2493 13.9643 43 84.8259 5.3871 14.1624 44 86.8159 5.5610 14.2407 45 88.8060 5.6426 15.1760 46 90.7960 5.8000 16.9000 47 92.7861 6.4000 17.0000 48 94.7761 6.5000 18.3000 49 96.7662 7.2590 19.4000 50 98.75621891 China: The distribution is not normally distributed because the figure is not a straight line. U.S.A Similar to China, it is noticeable from the plot that distribution of GDP growth rate for U.S.A is not normally distributed since the plot is not a straight line. Given the skewness of the distribution as determined by boxplots and normal probability plot, the data is best summarised by relating the five number summary. Correlation coefficient Applying excel to tabulate the value of correlation coefficient, the result is 0.1 for China and -0.4 for United States. These values are approximately zero hence it shows that GDP growth rate does not depend on time or rather the year. Scatter diagram of GDP growth rate The diagram is a confirmation that GDP growth rate in China is higher than that of United States. It is perceptible from the scatter diagram that GDP in China is fluctuating above the values of United States. Conclusions By applying various statistical analysis tools, it emerged that China’s GDP growth rate has been growing at a higher rate compared with United States. The concept of outliers and normal probability plot confirmed that the data for China and United States are not normally distributed. Given this situation, the five summary measures were critical in describing the central tendency of the data. However, the shortcoming of the research is that the data used in this report are secondary and historical. This means that several events must have taken place thus the data might not give an accurate outlook of GDP growth rates for the countries under investigation. Secondly, the data fails to take note of the quarterly changes in GDP growth rates effectively amounting to overgeneralization. In the future, quarterly changes in GDP for the countries will be taken into account. This will show the changes that are taking place in the countries in a short time interval. Works Cited LeBlanc, David. Statistics: Concepts and Applications for Science. Boston: Jones &Bartlett Learning, 2004. The World Bank Group: GDP growth (annual %) 2014. 29 Nov. 2014. . Read More