Foreign Direct Investment Relationship With Malaysian Economic Growth - Free Essay Example

Sample details Pages: 13 Words: 3751 Downloads: 3 Date added: 2017/06/26 Category Statistics Essay Did you like this example? Chapter 1: INTRODUCTION This study will give us an opportunity to identify the determinants of FDI that develops economic growth, to understand the importance of foreign direct investment (FDI) in enhancing the economic growth in Malaysia, and also the relationship between (FDI) and the economic growth in Malaysia. In this chapter of study, the main focus will be on research background, research objectives, research questions and also the significant of study. Research Background 1.1.1 The Trend of Foreign Direct Investment (FDI) Flow in Malaysia The relationship between the growths of FDI with countries has been a debatable issue for several decades. This has become an eye opener which agreed by (Karimi, Sharift and Yusop, 2009, p.2) which drive policymakers to engage in incentives such as export processing zone and tax incentive in order to attract FDI. However, the determinant of FDI in each country is different and failure to understand how a specific country can attract FDI will bring difficulties to changes in economy. In the case of Malaysia, in 2007 the economy was ranked at 29th largest economy in the world with gross domestic products that worth to be $357.9billion (World Bank, 2007). Despite the impact of many externalities such as, oil crises in 1970s, to downturn in electronic industry in 1980s, and majorly impact the Asian financial crisis in 1997s. According to (Ministry of Finance, 2006) the growth of economy in Malaysia was consistent from 1988 to 1996 and maintain the economic annual growth of 7-10% per annu m, by the year 2005 the main source of growth was the manufacturing sector whose share of GDP increase to 31.4 percent. Don’t waste time! Our writers will create an original "Foreign Direct Investment Relationship With Malaysian Economic Growth" essay for you Create order The key driver for the ongoing performance of Malaysiaà ¢Ã¢â€š ¬Ã¢â€ž ¢s economy is the result of policy reform which is a determinant Foreign Direct Investment (FDI) which enhances the economic growth of Malaysia. The evidence here can be seen by (Ministry of Finance, 2001) introducing the Investment Incentives Act 1968, free trade zones in early 1970s, and export incentives with open policy in 1980s has led to an establishment of FDI in the 1980s. One good example to show that the government has use policy as a determinant of FDI would be, The Promotion of Investment Act (PIA) 1986 which gave a larger percentage of foreign equity ownership in order to attract FDI to enhance economy of Malaysia. Figure 1: FDI inflow into Malaysia, (in million dollars) 1970-2004 This graph illustrates the FDI inflow from 1970-2004 in Malaysia. This research shown that (Har, Teo and Yee, 2008, p.12) FDI stock in Malaysia grew tremendously from 1970s to 1990s, despite fluctuation between the years, and the growth of FDI has been promising from $94 million dollars in 1970s to $2.6 billion by 1990s. Unfortunately, in the early 1990s, the rate of FDI inflow has decrease because of the slowdown investment in Malaysia by two main sources of investors which is Japan and Taiwan. As of 1996, the FDI rate (Har, Teo and Yee, 2008, p.12) has reach its peak when Malaysia successfully accumulated $7.3 billion dollar, by the end of 1998. There has been a major reduction in FDI inflow due to the financial crisis in 1997 that affected many Southeast Asia countries. Unfortunately, by the early 2000s the inflow of FDI in Malaysia has been unpredictable and inconsistent, but still manages to generate average inflow of $3billion per year. In 2007, Malaysiaà ¢Ã¢â€š ¬Ã¢â€ž ¢s inward (FDI) performance index has reduce compared to the inward (FDI) potential index which shows that Malaysia lack the capability to attract foreign investors in this recent years as seen in table1, and the key factors is because neighboring countries such as China, and India has much more attractive offers such as lower labor cost that make their business more efficient. Since the inflow FDI has been decreasing, Malaysia was ranked 71 in 2007. Table 1: Malaysia rankings by inwards FDI Performance Index, Inward FDI Potential Index (2005-2007) The table above explains that inward FDI inflow in Malaysia were only US $ 8,043 million and it was only 2.6% of total inflow of FDI to Asia and by that time China has possesses the share of as much as 26.05%.(World Investment Report, 2008) The conclusion can be made here is that Malaysiaà ¢Ã¢â€š ¬Ã¢â€ž ¢s reduction inflow of FDI is mainly because their incentive are becoming less competitive compared to other countries in Asia. Problem Statement FDI is strongly recommended to achieve consistent economic growth and resulting in modernisation in industrialisation and raise the living standards of the society. There are many determinants regarding FDI and based incentive policy is one of them. Research shows that (Lam and Liew, 2009, p.435) 2 main assumption of this incentive are that à ¢Ã¢â€š ¬Ã…“high monetary incentive allows FDI to be attracted easierà ¢Ã¢â€š ¬? and à ¢Ã¢â€š ¬Ã…“high inflow of FDI might lead to higher economic growthà ¢Ã¢â€š ¬?. Unfortunately, à ¢Ã¢â€š ¬Ã…“incentiveà ¢Ã¢â€š ¬? is not necessary monetary-based like tax exemption but can be a long term relationship that seeks for mutual benefits of both sides. The evidence can be seen that the total inflow of FDI into the region of South East Asia, East Asia and South Asia has increased by 15% to USD 165million in 2005 but for Malaysia despite the fact that many monetary based incentives is provided, Malaysia still experiencing a decrease in foreign direct investment. (Tomlinson, Abdullah, Kolesnikov and Jessop, 2006) In 1990, Malaysia was ranked 4th in the world for FDI, but was ranked 62th in 2005 and recorded negative inflow of net foreign direct investment in the year 2007 More attention should be given by government, researchers and policy makers to identify the problem and produce the solution that can stimulate the FDI in Malaysia. Much research has been done to stimulate FDI, but a lot lesser research has been carried out considering international relations because mostly focus on microeconomic aspect of domestic firm performance. It is very important for foreign investors to gain confidence to invest in Malaysia, hence enhance the economic growth in Malaysia. More research should be done to determinant other determinants of FDI in order to develop the performance of economy in Malaysia. It is very important for more research to be done on FDI with international relation in order to identify the determinants of FDI that can stimulate the economic growth of Malaysia and not on incentive that only focuses on profit maximization of one sided benefits. Research Objectives The objective of carrying out this study is as below To review the determinants of FDI that is affecting economic growth in Malaysia To analyze the relationship between FDI and economic growth in Malaysia. To evaluate some policy actions related to increase the inflow of FDI in Malaysia. Research Questions This study is conducted to address the following research questions: Do the determinants of FDI inflow affect the economic growth in Malaysia? Will relationship with FDI result in bloom of economic growth in Malaysia? How policy actions can increase the inflow of FDI in Malaysia? Chapter 2 : LITERATURE REVIEW 2.0 Introduction In this section, a review of literature will provide us with a better understanding of the determinant of FDI and the growth of economic in Malaysia. This chapter focuses on the empirical studies on the role of FDI in the economic growth of host countries. Furthermore, a conceptual framework of these variables will be provided. 2.1 Review of Literature 2.1.1 Foreign Direct Investment (FDI) Foreign Direct Investment (FDI) has associate with many leading roles in development of host countries such as source of capital, new job opportunities, diffusion of new technology into country, and develop overall economic growth of host countries. Empirical studies have been carried out to show the relationship between FDI and economic growth while others focuses more on the causality of these two variables. Different methods are use by research to find out the determinants of FDI and the relationship it has with economic growth of host countries. By using cross-section data and OLS regression, Balasubramanyam (1996) found out that host countries that impose export promoting strategy produce positive growth of FDI on the economic growth but this does not apply to host countries as imposes import substitution strategy. Cross-sectional data has also conclude that high level of institutional capability which measured by degree of property right protection and bureaucratic efficiency in host country leads to a positive effect of FDI which enhances the economic growth of host countries. (Olofsdotter, 1998) In the work of Borensztein, et al. (1998), they utilize the cross country regression framework to analyse the effect of FDI on economic growth. They use the FDI flows data from industrial countries to 69 developing countries for the past two decades. Their research provided essential information that shown FDI plays an important role in diffusing new technology in host countries, and relatively boost overall economic growth rather than domestic investment. According to another research on (Borensztein et, al.1998) developing economies which focuses on the diffusion process of technology and economic growth, they found out that the positive impact of FDI on economic growth is highly dependent on the availability of human capital in the specific host country. De Mello (1999) uses both time series and panel data fixed effects for a sample of 32 developed and developing countries to study the relationship of FDI and economic growth. However, he only found out little result showing positi ve effect of FDI that affects the economic growth of host country. There are also other research that focuses on the causality between FDI and economic growth. Zhang (2001) and Choe (2003) use co integration and Granger causality test for a sample of 11 developing countries in East Asia and Latin America. Zhang (2001) found out that 5 cases that shows enhancement of economic growth but the condition of host country is important, so factors such as macro stability and trade regime must be attractive to attract FDI in host countries. Through the research of Choe (2003), the finding of casuality between FDI and economic growth shows that FDI is dependent on the economic growth of host country and not the other way around. Little evidence was shown that FDI enhance the growth of economy, but mainly supports that rapid economic growth enhances the FDI inflow into the country. Chowdhury and Mavrotas (2003) use innovative econometric methodology to identify the causality of FDI and economic growth. The research was done using time series data from 1969 to 2000 for three developing countries that are Malaysia, Chile and Thailand. Each country involve with different background of determinants of FDI such as macroeconomic episodes, growth patterns, and policy regimes. Their study found out that GDP was the cause of growth of FDI in Chile, but it does not go the same with Malaysia and Thailand which has strong evidence of bi-directional causality of these two variables. In the case of Frimpong and Abayie (2006), In the research (Bengoa and Sanchez-Robles, 2003) by using panel data to study Latin America between the relationship of FDI and economic growth, they found out there is a positive impact of FDI that lead to increase in economic growth but the research is similar to Borensztein, et.al, (1998) that says economic development depend on the countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s stability condition. Finally, Duasa (2007) which focus on the causality between FDI and output of economic growth in Malaysia and the study found no evidence of relationship between FDI and economic growth. These has indicate that in the case of Malaysia, FDI does not cause economic growth but FDI contributes to stability of growth as growth contributes to stability of FDI. In order to understand the determinants of FDI more accurately, we can see through research done by Vernon (1966) by using product cycle hypothesis which relates to trade theory by Hufbauer (1966). The theory is about the relationship between investment theory and trade theory by using products as they are export or invested. They found out that competition prices in host countries drives foreign investors to seek cost advantages especially labour cost. This shows that innovation of countries to attract FDI is important to improve economic growth. 2.1.2 Economic growth in Malaysia Export growth can be considered as the most researched determinant factor of (FDI) in economic growth. According to Chow (1987, p.124), à ¢Ã¢â€š ¬Ã…“the export growth of development countries can be identified through the impact of increase in countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s income, non-export production of goods, resource allocation, and capital efficiency, ability in handling external shocks, negative external effects and also total productivity factor.à ¢Ã¢â€š ¬? Therefore, research has shown export strategy has been an effective factor in enhancing the economic growth of developing countries. Furthermore, these countries have also testified that export promotion is an effective development strategy (Jung and Marshall, 1985). However, export strategy is not the main determinant factor of FDI that promotes economic growth. According to Ahmand and Harnhirun (1996) research, by using time data series from 1966 until 1988 to determine whether export is the main (FDI) factor that affects countries economic growth on industrial countries like Malaysia, Philipines, Singapore and Thailand, they found out that economic growth and export is dependent on development of countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s policy, and also economic development causes export growth not the other way around. In order to (Alfano et.al, 2004) identify the relationship between FDI, financial market, economic growth and also to find out whether countries with better financial systems are able to exploit FDI effectively. An empirical analysis was done by using cross country data from 1975 to 1995 which concluded that FDI played a leading role in contributing to economic growth in 71 countries which means countries with good financial market are able to take advantage of opportunity offered by FDI. Li and Liu (2005) studied whether FDI affect economic growth by using single and simultaneous system of equation techniques to test these two variables. Their research found a significant relationship between FDI and economic growth which identified, Human capital has indirect interaction with FDI that leads to positive impact on economic growth in developing countries, whereas countries with insufficient technology knowledge will have significant negative impact on economic growth in developing countries Another study done by Hsiao and Hsiao (2006) using panel data and time series from 1986 to 2004 to identify Granger causality between GDP, export and FDI among China, Korea, Taiwan, Hong Kong, Singapore, Malaysia, Philippines and Thailand found out that FDI has direct one way effect on GDP and indirect effect through export. There was also bilateral causal relationship between export and GDP. Lastly, study done by Baharumshah and Thanoon (2006) using quantitative assessment found out that FDI effects economic growth both long-term and short term in the host countries. Their research has also shown that countries that are able to attract inflow of FDI successfully can generate more investment which leads to faster overall development of economy, hence FDI is a major contributing factor in the economy of East Asian countries. Ang (2007) use annual time series data from 1960 to 2005 in order to find out the determinants of FDI in Malaysia found out that GDP growth had a significant positive impact on FDI inflow. 2.2 Theoretical Framework Foreign direct investment (FDI) Independent variable Dependent variable Technology advancement Economic growth in Malaysia Human Capital Policy development Social GDP 2.2.1 Analysis path This framework is to understand the research of the two variables in the case of my research proposal, foreign direct investment (FDI) is the independent variable and economic growth in Malaysia would be the dependent variable. The purpose of this research proposal is to understand the relationship of FDI and economic growth in Malaysia. In addition, Malaysia can implement different FDI contributing factor that can enhance economic growth in the country. The analysis here is about the determinants of FDI and it interests me in which Malaysia can implement and make FDI more attractive to be invested by foreign firms. In this analysis, the information accumulated should provide the key determinants of FDI at the same time enhance the development of economic growth in Malaysia. Chapter 3: METHODOLOGY 3.0 Introduction This section describes the research methodology use in the study to access the relationship between FDI and economic growth in Malaysia. Simple ordinary least square (OLS) regression and the empirical analysis are done using annual data of FDI and economic growth in Malaysia over the 1970-2005 periods. The research was done using annual data from IMF international Financial Statistic tables, published by International Monetary Fund to find out the relationship between FDI and economic growth in Malaysia. 3.1 Data 3.1.1 Data Resources According to Romano (2004), primary data can be define as data that is collected specially for the purpose of answering research question, while secondary data can be define as existing data collected in order to answer different research project. Secondary data was chosen for this research because it is less expensive compared to primary data, and takes less time to collect data that is needed for research. (Romano, 2004) Secondary data has made information far easier to be obtain by interpreting information from primary data and published them through secondary resource such as newspaper, journals, books, internet, and also research reports. () The existence of secondary data happens when a project needs the collection of data that has already been research in order to further understand the research question on a new project That is why secondary data is essential in order for us because it provide us with the knowledge to form research design and also answering our research quest ions in a more in depth scale. 3.1.2 Data Analysis Procedure In order to complete this research proposal we have mainly use secondary resource such as journals, websites, books, and also research report. Secondary resource has provided us with the information needed at the same time save us time and cost. KBU International College has provided us with books that contain the information needed for us to make references for our research topic. Internet network has been a major contribution by using the Google Chromes search engine we are able to obtain various journals and reports from websites that allows us to make reference and understand our research objectives. Emerald website in particular by using Anglia Ruskin University account has granted us the access to various journals that are easy to obtain without any hassle. The usage of less text book is because the library has insufficient information needed to answer our research questions. 3.2 Hypothesis Null hypothesis H0: FDI is not important for transporting advance technology to enhance host country economic growth. Alternate hypothesis H1: FDI is important for transporting advance technology to enhance host country economic growth. Technology advancement is essential in developing economic growth because it produces skilled labor that will enhance productivity and satisfying demands from consumer. According to Easterly et al. (1995), technology transfer depends on the diffusion process and can take place in 4 forms which is transfer of new technologies and ideas, high technology imports, foreign technology adoption and also level of human capital. Diffusion process of technology into host countries can be different depending on the human capital and availability of technology in the country itself. Example, study made by Borensztein (1998) on developing economies concluded that FDI has positive economy growth but the effect of magnitude depends on the availability of human capital in the host country. This clearly shows that advance technology is very important to enhance economic growth at different level of diffusion growth. Null hypothesis H0: Economic stability is not important to attract FDI into the country Alternate hypothesis H2: Economic stability is important to attract FDI into the country Many countries should pay more attention to economic stability in order to attract FDI which can enhance economic growth. With a stable economy it portrays a positive image and good economic positioning, which in turn attracts foreign investors to invest and generate profit from the investment made in the foreign country as a guaranteed. Therefore, determinants of economic stability should be given attention, the determinants are such as exports, and government expenditure, domestic consumption, and exchange rate that should be manage well by government. According to the research done by Kogid,et.al,(2010) , the most important determinant of economic stability in Malaysia is export and consumption expenditure. Their study also found out that government expenditure and exchange rate are less effective on economic growth but it does not mean it should be ignored but these factors can be act as catalyst and complement factor of economic growth. Null hypothesis H0: Implication of policy does not promote economic growth. Alternate hypothesis H3: Implication of policy does promote economic growth Implication of policy reform is important to draw attention of foreign investment. Policies to promote growth have evidence but it does not work for other countries. This can be seen from the study made by Ahmad and Harnhirun (1996) which studied on new industrial countries such as Indonesia, Malaysia, Philipines, Singapore and Thailand that found out export and economic growth dependent on development of policy. Therefore, government should impost relevant policies to attract FDI into Malaysia. Example, policies like joint venture which give opportunities to domestic producer to become one with foreign investors. This way will benefit local partner as they have exposure towards technology. 3.3Limitation Theoretical framework of FDI that is use to analyses the FDI determinants and economic growth in Malaysia could have been done more accurately with more secondary resources. Firstly, KBU International College provides insufficient books that have relation with this research topic. However, KBU does provide student with the account to access Emerald websites that contains many research journals and reports that is very convenient for our research topic. In addition, some determinants of FDI in the theoretical framework were not taken into consideration because there has been insufficient research done on some determinants of FDI that affects economic growth in Malaysia. As a result, this research is not entirely completed to reflect the full extent of FDI on Malaysiaà ¢Ã¢â€š ¬Ã¢â€ž ¢s economy growth. Since this research is mainly dependent on opinions of researcherà ¢Ã¢â€š ¬Ã¢â€ž ¢s around the world, this may lead to inaccuracy of research because they might disagree with research and opinions done by other authors around the world. 4.0 Ethical Consideration Before the research is done, respondents will be notified regarding the aim, benefits and purpose of the research is conducted and the method that is engage to carry out this research so that respondent will be able to understand the reason of caring out this research and the potential hazard level of this research. There are also no pressure of any kind shall be force for individual to become subject of research. In addition, respondents have the permission to withdraw or terminate from participating and becoming subject of the research. These are the ethical action taken so that there will be no violation of human rights. The identity of respondents from who involves in the survey is strictly confidential and shall be discarded once research is completed unless permission is granted by respondents for publish sake. No information of respondents will be revealed and included in the final report.

Diversity And Demographic Characteristics Essay - 1172 Words

Diversity and Demographic Characteristics Introduction Diversity relates to gender, age, language, ethnicity, cultural background, disability, sexual orientation or religious belief, including that people are different in other respects such as educational level, job function, socio-economic background, personality profile, marital status and whether or not one has family. Diversity and demographic differences can impact individual behavior by creating conflict in the workplace. The success of an organization depends on the workforce of the organization. A workforce made up of diverse individuals from different backgrounds can bring the best talent to an organization. There are many types of diversity and demographic characteristics†¦show more content†¦Historically speaking, women truly have not been a part of the workforce for very long yet they often bring new and refreshing ideas and approaches. Debra Burrell, the regional training director of the Mars-Venus Institute in New York says, Women managers tend to have more o f a desire to build than a desire to win. Women are more willing to explore, compromise, and to solicit other peoples opinions. By contrast, men often think if they ask other people for advice, theyll be perceived as unsure or as a leader who doesnt have answers. Debra Burrell says, Men tend to be quicker at making decisions, compared to women. Male managers are also more adept at forming what management psychologist Ken Siegel calls navigational relationships, or temporary teams set up to achieve short term goals. Men also tend to be decisive, logical, aggressive, and often more independent than woman. As men and woman work more closely together, they are learning from one another and picking up characteristics from one another; thus improving the quality of working relationships and becoming more productive. 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Pepper V Hart Free Essays

Hansard is the official daily report of parliamentary debates and the record of what was said during the introduction of legislation. As one of the external aids, referencing to Hansard can help the courts to discover how Parliament intended the law to apply and put that into practice. Initially such documents could not be consulted for the purpose of statutory interpretation. We will write a custom essay sample on Pepper V Hart or any similar topic only for you Order Now In 1992 the House of Lords delivered a blockbuster in the case of Pepper v Hart [1992], which overturned the rule against consulting Hansard. However, more and more people argue that its drawbacks outweigh its advantages. The case of Pepper v Hart was between teachers at a fee-paying school and the Inland Revenue, and concerned the tax which employees should have to pay on perks. The school allowed its teachers to send their sons there for one-fifth of the usual fee. Since the amount paid by teachers covered only the extra cost rather than the school’s fixed costs, the perk cost the school little or nothing, and so they maintained that they should not have to pay tax on its. Nonetheless the Inland Revenue disagreed and argued that according to tax law the perk should be taxed on the basis of the amount its saved the teachers on the real cost of sending their children to the school. The reason why the issue of consulting parliamentary debates arose was that, during the passing of the Finance Act 1976, the then Secretary to the Treasury, Robert Sheldon, had specifically mentioned the kind of situation that arose in Pepper v Hart. He had stated that where the cost to an employer of a perk was minimal, employees should not have to pay tax on the full cost of it. By a six to one majority the House of Lords decided to allow reference to be made to Hansard. The permission was made in limited circumstances. First, legislation is ambiguous, or leads to an absurdity; Second, the material relied upon consists of statements by a minister or other promoter of the Bill. Third, the statements relied upon are clear. The main advantage of referencing Hansard is it can help to prevent the absurdity and injustice caused by the literal rule. When interpreting a tatute the courts can consult Hansard to see what a Minister had said about a piece of legislation in order to decide what Parliament had intended. This permission causes the effect that the literal meaning of the statute is not followed, which may help the courts to present more proper statutory interpretation. However, many people hold opposite opinion on the use of this source. A practical objection by the dissenting justice lord Mackay was the expense both in terms of time and money will add to l itigation. If debates were to be used, there was a danger that the lawyers arguing a case would devote too much time and attention to ministerial statement. Lord Steyn (2001) criticized that the counsel were expected to read all the debates in Hansard, which would add greatly to the time and expense involved in preparing cases. He suggests that much of the work of the courts is now concerned with the interpretation of documents such as statutes rather than the examination of precedents. The evidence in Hansard may be lack of clarity. The House of Lords directed that the evidence provided by the parliamentary debates might not be reliable and contain ‘conducive to a clear and unbiased explanation of the meaning of statutory language. ’ Moreover, it is difficult to discover the nature of parliamentary from the Hansard. Pepper v Hart seems to confuse the statement made by a minister or promoter of the bill with the intention of the legislature. Lord Steyn points to the nature of the parliamentary process: there are not ideal conditions for the making of authoritative statements about the meaning of a clause in a Bill. In truth a Minister speaks for the Government and not for Parliament. The statements of a Minister are no more than indications of what the Government would like the law to be. ’ Nowadays there is a trend that reference to Hansard can be found in every other case involving interpretation and construction of enactments often without any serious application of mind concerning their relevance or conformity with the aid down in Pepper v Hart. The advancement in technology is definitely a major factor contributing to this trend as it makes referencing much easier. However, electronic access relates only to recent years; for any other research one has to overcome the appalling indexing for Hansard. Due to its drawback, there is a trend that the courts are reluctant to allow references to Hansard without a fair bit of persuasion. Many restrictions are placed to prevent the overuse of Hansard. In 2003, the House of Lords restated the scope of Pepper v Hart that the court is called upon to evaluate the proportionality of the legislation, not the minister’s exploration of the policy options or his explanations to Parliament. The latter would contravene article 9 of the Bill of Rights. Overall, though allowing references to Hansard has an additional aid to interpretation is welcome, references to Hansard can give rise to further ambiguity i. e. legislation being found to be incorrect. Also, it is very costly in time and money. Since it is arguable that its drawbacks outweigh its advantages, more strict guidelines should be adopted to prevent its overuse in order to maintain the efficiency of the legal system. How to cite Pepper V Hart, Essay examples

Descriptive Analysis and Scatter Diagram of RR and GR

Questions: (a) Provide a descriptive analysis of the two variables (e.g., mean, standard deviation, minimum and maximum)? (b) Develop a scatter diagram with retention rate as the independent variable. What does the scatter diagram indicate about the relationship between the two variables? (c) Develop and estimate a regression equation that can be used to predict the graduation rate (%) given the retention rate (%)? (d) State the estimated regression equation and interpret the meaning of the slope coefficient?(e) Is there a statistically significant association between graduation rate (%) and retention rate (%). What is your conclusion? (f) Did the regression equation provide a good fit? Explain? (g) Suppose you were the president of South University. After reviewing the results, would you have any concerns about the performance of your university compared to other online universities? (h) Suppose you were the president of the University of Phoenix. After reviewing the results, would you have any concerns about the performance of your university compared to other online universities? Answers: Purpose The purpose behind this study to analyze the data and find the correlation among the retention rate (%) and the graduation rate (%) for 29 online colleges in the United States. This correlation can be seen via use of methodologies like regression analysis and the scatter diagram formation. In this task we have used descriptive analysis along with these methodologies so as to find out the performance of web-based universities / colleges. Background The Online Education System is at its central part what provoked technical developments in e-books, knowledge Management and knowledge Record administration (Dweck, 1990). These arrangements facilitate students to utilize the substance from everywhere with access to the internet. Online system of teaching is a alike way used by the institutes and colleges, which assists in understanding and attaining understanding exclusive of presence in the classes. This education system needs no physical classes attendance and so saves time. These way students can use their time and study as per their convenience. The aim of online education system is to make the students self-sufficient with the web-based journals and articles. This kind of education approach was initiated by U.S with the emergence of internet and has been adopted all over the World (Phipps and Merisotis, 1999, April). Graduation rate It is defined as the grouping of the institutes where initially, 1st year student who productively were able to complete their courses in 150 % of the whole agreed time granted for the selected course. Retention rate It is termed as the category of the institutions where 1st time, 1st year undergraduate students who are interested in proceedind with their studies at the university for the coming session. Method Variables As discussed above, we have considered 2 variables for the study, namely- retention rate (RR) graduation rate (GR). These variables have been used for 29 universities in US for the online courses. These variables are based on the survey to find out the value and contribution of a particular college/ institute. Statistical Analysis:- We can find out the mean (average), standard deviation for the two variables (RR and GR). This would enhance the value of the analysis we have performed. The scatter diagram has been utilized to reflect the correlation among the 2 variables, and also the estimated value of regression equation has been applied. The P value is on 0.05% level of significance to settle on the correlation among Retention rate (RR) with Graduation Rate (GR). The variables relationship can be depicted by use of excel sheets as well. Results a). Descriptive Analysis We have the data for 29 universities offering online courses. This data is w.r.t Retention rate and the Graduation rate. In the first step, we have assessed the mean and Standard Deviation for the data given. Table (i) Variables Mean (Average) Standard Deviation Minimum Maximum Retention Rate 57.41% 23.24% 4% 100% Graduation Rate 41.76% 9.87% 25% 61% Retention rate (RR) In the table (i) above, Mean has been 57.41 for Retention rate (RR) which means that approx 57% students have been part of the online education system .e. are enrolled and are students in the given 29 online universities in USA. The standard deviation for Retention rate is 23.84 % with the highest level of RR as 100% and the lowest of RR as 4% that means there has been a broad range of data distribution. Graduation Rate (GR) The mean has been 41.76 for the Graduation Rate (GR), which reflects that approximately 42% of the students were able to finish the graduation within the 150% of the allotted time. The standard deviation for Graduation rate (GR) is approx 10 % with the highest level of GR as 61% and the lowest of GR as 25% that means there has been an intermediate range of data distribution. b). Scatter Diagram of Retention Rate and Graduation Rate: In the Diagram (a) below i.e. Scatter diagram for RR and GR, there is a robust positive correlation among these 2 variables. There has been an increase in the two variables simultaneously, reflecting a positive relation among them. It means Retention Rate has a positive impact on the Growth Rate. Diagram (a)- Scatter Diagram for RR and GR Source: Own study (c) Simple linear regression equation is utilised to articulate the value of Y on specified value of X. consistent with diagram (a), we attain the equation in scatter chart that makes clear that the slope coefficient is depicted prior to intercept. With the intention of settling on the value of (Y) on (X), the equation specified underneath can be utilized: ÃÅ'‚Yi = bo + b1Xi Where, Yi= Predicted GR b0= Intercept b1Xi=Slope Coefficient Here, with the above equation the Y value is capable of being determined by the specific value of X. For instance if the X value is 85 % in that case the expected Graduation Rate(GR) will be: Y = 25.423 + 0.2845 X = 25.423 + 0.2845 (85) = 25.423 + 24.18 = ~49.6% The forecasted Y value demonstrates that in case the Retention rate (RR) will be 85 % in that case the Graduation Rate(GR) will be approximately 50%. That depicts, if 85 % undergraduates study with the graduation grade only 50 % students will attain/finish the degree in the duration of the course i.e. 3-4 years or within 150% of the duration i.e. 5-6 years. (d) Estimation of regression equation and interpretation of slope coefficient Table (ii) Regression Statistics Multiple R 0.67 R Square 0.45 Adjusted R Square 0.43 Standard Error 7.46 Observations 29 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 25.42 3.75 6.79 0.00 17.74 33.11 RR(%) 28% 6% 4.69 0% 16% 41% Regression equation is Y = o + 1 x + r Intercept coefficient In the table (ii) above, there has been a steady transform of 25.42 in the GR which is not as a consequence of RR. Slope coefficient It intricate the type of transform that is to Y due to the changes in values of X. As observed in table (ii) the rate of slope coefficient is 28%. This implies that an average of 28 % of undergraduates finishing the graduation can be assured by the 1 unit augment in the percentage of students getting enrolled. Residual or r It is the variation among recorded value and estimated value of dependent variables. Herein, the observation of standard residual depicts that the score is +3 further lesser than -3 is well thought-out to be outliners although there have been no outliners. (e) The association between GR RR The value of intercept and Retention Rate in regression scrutiny is 0. therefore we can conclude one thing concerning RR-that there is a well-built association among (Retention Rate and Growth Rate. then again augment in students getting enrolled will augment in the number of students turning to graduates as well. (f) Is that Regression Equation provides a good fit? For regression model a good fit is achieved by the value of R2. In the diagram above, for the scatter diagram, Regression analysis depicts the value of R2 as 45% i.e. the variance or difference in regression for Graduation Rate for the 29 online universities. This equation is a good fit, since 45% can be considered as a high value. (g) Performance of South University compared to other online universities and Presidents Concern The Retention Rate for the South University stated is 51%, which means its approximately 6.5% less than the Mean Retention Rate (57.41%) for the 29 web based universities. on the other hand the Graduation Rate of the South universities is barely 25%, this demonstrates that the number of undergraduates finishing their graduation as of south university is negligible. The Retention Rate of south universities is 51% . Consequently this immense variation in the Retention Rate and Graduation Rate of the South universities generates a pitiable representation of the south universities regarding repute and excellence. The assessed Graduation Rate is 40 %, which is extremely small in comparison to other universities. on the other hand, with the intention of developing the Graduation Rate repute of the university admission eligibility standards excellence of schooling have to be paid attention to. (h) Performance of University of Phoenix compared to other online universities and President Concern The University of Pheonix has a extremely small Retention Rate i.e 4 % and smallest Graduation Rate which is 28 %. mutually these values are below standard w.r.t other universities. As I am the President, so the enrolment percentage is a cause of worry for me, since its also the bare minimum. In order to make these 2 variables better I need to consider some well planned strategy as well as improve on the policies for admission of students. The quality of education can be enhanced by employing a good, experienced and knowledgeable faculty. In case there is a need for revision of the content of the courses, it should also be done. The better the marketing strategies, higher will be the number of enrolments, and better the quality of education, higher will be the graduation rate. Discussions The Mean Graduation Rate=42% and Mean Retention Rate= 57%. As the data is broad, so the Retention Rates standard deviation is quite elevated. Graduation Rates deviation is merely 10%. There have been dropouts, leading to lower GR and RR. There have been cases wherein students leave the online courses and join regular institutes, or leave the courses in between. However, The analysis for regression has been depicting intercept at 25% depicting that the movement in Graduation Rate is not standard retention or at the time the retention is null. These variations are owing to diverse causes for instance low cost, first-class students etc. Recommendation: Online System of education gives the freedom to the understudies, yet occasionally understudies exploit the freedom therefore there ought to be a fitting check on the understudies by their professors (Roblyer and Edwards, 2000). All the online colleges ought to keep up their standard regarding training material a framework, superior instruction to the understudies. It has been observed that great and prepared staffs ought to dependably be able to guide students and make them comprehend the real issue, so that inevitably they can discover the arrangement all alone and turn into self-sufficient ones. The charges composition ought to be kept exceptionally moderate and available for all the levels of understudies present in the general public. Students ought to be permitted to view and listen in all the live addresses at some occasions (Newby et al. 2000). The marketing technique also needs to be god, so as to increase the number of enrolments to the university. And the fees structure should be kept very affordable and accessible for all the levels of students present in the society. References Dweck, C. S. (1990). Self-theories and goals: Their role in motivation, personality, and development. Paper presented at the Nebraska Symposium on Motivation, Lincoln Newby, T. J., Stepich, D. A., Lehman, J. D., Russell, J. D. (2000). Instruction technology for teaching and learning. Upper Saddle River, NJ: Merrill. Phipps, R., Merisotis, J. P. (1999, April). Whats the Difference? A review of contemporary research on the effectiveness of distance learning in higher education. Washington, DC: The Institute for Higher Education Policy. Roblyer, M. D., Edwards, J. (2000). Integrating educational technology into teaching (2nd ed.). Upper Saddle River, NJ: Merrill.