CORRELATION MATRIX

Before stepping forward the pre-requisite of regression analysis; the data shall be clear of

multicollinearity, was checked. For this purpose Pearson correlation matrix was used.

Table 4.2: Pearson Correlation Matrix of the Independent Variables

VARIABLES IPC FDI MI HC FR TO DS

IPC 1

FDI -0.03 1

MI -0.14 -0.03 1

HC -0.08 0.40 -0.32 1

FR 0.34 -0.30 -0.37 -0.30 1

TO -0.11 0.18 0.32 0.21 -0.18 1

DS -0.07 -0.29 0.11 0.30 -0.23 0.35 1

The coefficients matrix is presented in table 4.2. To check the correlation’s strength, guidelines

suggested by Pallant (2013, pp: 132), initially proposed by Cohen (1998, pp: 7981) should be

used. Absolute values of r = 0.1 to 0.29, r = 0.30 to 0.49 and r = 0.5 to 1.0 means small, medium

and large correlations respectively. Table 4.2 displays the direction and strength of correlations

of the independent variables. The results look good as none of the variables have even exceeded

the medium upper bound i.e. 0.49. In short there existed no severe correlations that could harm

the regression results. The lowest negative correlation existed between FDI and IPC, MI and

FDI having coefficient of -0.03 while highest between FR and MI i.e. -0.37.