III.

Multiple Regression

Using the data collected in part I, we can implement multiple regression to build 4 regression models
that will predict internet usage using data we have collected from countries in 4 income groups.

3.1. Backward elimination.

Firstly, we will use Microsoft Excel’s regression analysis tool to clean and select only the most significant
data, applying backward elimination. Considering the requirement significant level is 5% (α=0.05,
α/2=0.025), we apply the p-value method to determine significant variables.

Applying the backward elimination method, the final regression models are presented below:

- Dependent variables: Internet Usage (% of population)

- Independent variables:
 Gross Nation Income per Capita (GNI/capita)
 Access to electricity (% of population)
 Net foreign direct investment (FDI) (% of GDP)
 Mobile cellular subscription (per 100 people)

3.2. Final models.

3.2.1. High-Income Countries

a. Regression output and scatter plot

Figure 3.1: Regression output and scatter plot for high-income countries.
b. Regression equation:
Y^ = 73.36 + 0.000312X
Y^ = Individual using the internet (% of the population)
X = GNI per capital (current US$)

c. Interpretation of the coefficient of the significance of the independent variable

According to theory, if GNI per capita increases by 1 unit (1 current USD), then Internet usage of high-
income countries will increase by 0.000312%. Applying this scenario, each 1000USD increase in
GNI/capita will result in a 0.312% increase in internet usage.

d. Interpretation of the coefficient of determination

R-squared equal to 0.4362 (Figure 3.1), which suggests there is a 43,62% difference in the overall
internet usage. This difference could be explained by the independent variable. The remainder is
attributed to other variables not included in the model.

3.2.2. Upper Middle-Income Countries

a. Regression output and scatter plot

 Figure 3.2: Regression output and scatter plot for upper-middle-income countries.

b. Regression equation:

Y^ = -159.699 + 2.253X
Y^ = Individual using the internet (% of the population)
Where X = Access to electricity

c. Interpretation of the coefficient of the significance of the independent variable

According to theory, if Access to electricity increases by 1 unit (1% of the population), then Internet
usage of upper-middle-income countries will increase by 2.253%. Applying this scenario, each 10%
increase in access to electricity will result in a 22.53% increase in internet usage.

d. Interpretation of the coefficient of determination

R-squared equal to 0.324 (Figure 3.2), which suggests there is a 32,4% difference in the overall internet
usage. This difference could be explained by the independent variable. The remainder is attributed to
other variables not included in the model.

3.2.3. Lower Middle-Income Countries

a. Regression output and scatter plot

 Figure 3.3: Regression output and scatter plot for lower-middle-income countries.

b. Regression equation

Y^ = b 0+ b1X
Y^ = -2.3902 + 0.0192X
Where:

b 0 = -2.3902

b 1 = 0.0192

Y^ = Individual using the internet (% of the population)

X = GNI per capita (current USD)

c. Interpretation of the coefficient of the significance of the independent variable

According to theory, if GNI per capita increases by 1 unit (1 current USD), then Internet usage of lower-
middle-income countries will increase by 0.0192%. Applying this scenario, each 1000USD increase in
GNI/capita will result in a 19.2% increase in internet usage.

d. Interpretation of the coefficient of determination

R-squared equal to 0.7007 (Figure 3.3), which suggests there is a 70,07% difference in the overall
internet usage. This difference could be explained by the independent variable. The remainder is
attributed to other variables not included in the model.

3.2.3. Low-Income Countries

a. Regression output and scatter plot

Figure 3.4: Regression output and scatter plot for low-income countries.

b. Regression equation
Y^ = 10.077 + 0.282X
Where:

b 0 = 10.077

b 1 = 0.282

Y^ = Individual using the internet (% of the population)

X = Access to electricity (% of the population)

c. Interpretation of the coefficient of the significance of the independent variable

According to theory, if Access to electricity increases by 1 unit (1% of the population), then Internet
usage of lower-middle-income countries will increase by 0.282%. Applying this scenario, each 10%
increase in access to electricity will result in a 2.8% increase in internet usage.

d. Interpretation of the coefficient of determination

R-squared equal to 0.801 (Figure 3.4), which suggests there is an 80,1% difference in the overall internet
usage. This difference could be explained by the independent variable. The remainder is attributed to
other variables not included in the model.