Internal Code: MAS5631
The government is conducting a review of its trademark policy. In particular the government believes that policies that encourage a large number of trademark applications will lead to a higher GDP per capita 20 years into the future. To investigate this issue, the government have used a database from the World Bank where 60 countries have been chosen at random. The database includes the following variables:
• Country: The name of the country.
• GDP1115: Average Gross Domestic Product (GDP) per capita in a country measured in ’000s US dollars over the period 2011-2015.
• GDP9195: Average Gross Domestic Product (GDP) per capita in a country measured in ’000s US dollars over the period 1991-1995.
• TM9195: Average number of trade mark applications in ’000s in a country over the period 1991-1995.
• OECD: A dummy variable equal to 1 if a country belongs to the Organisation for Economic Co-operation and Development (OECD) and 0 otherwise. The government has run a regression of GDP1115 on TM9195
The estimated model with standard errors in parentheses is
GDP1115 ˆ = 12.683 (2.682)+ 0.304 (0.1) × TM9195
The coefficient of TM9195 is statistically significant. From this analysis the government concludes that to achieve a higher GDP per capita, they should implement policies to encourage a higher number of trade mark applications.
1. Critically evaluate the approach and main conclusion of the government with regards to model specifically and the assumptions of the regression model. Discuss ways that the regression analysis conducted by the government could be improved.
2. Conduct your own analysis of the problem and make a conclusion about whether the number of trademark applications is associated with a higher level of GDP per capita in the future.
3. Describe some of the limitations of your own approach.