MATH IA

USING LINEAR REGRESSION TO PREDICT

WHEN VIETNAM MEETS MIDDLE-INCOME TRAP

I. INTRODUCTION
II. ANSWERING THE RESEARCH QUESTION
a. Mathematics use
To evaluate trends or forecast about the relationship of a variable (called
dependent) based on the change of another variable (called independent), the
linear regression is used to predict the distribution of these intersections which are
nearby the line.
The simple linear regression equation is shown as:
Y = β0 + β 1 X

In which:
Y is dependent variable β 0 is a constant of intercept
β 1 is slope / coefficient X is independent variable

To model a country’s economy, the dependent variable Y is used to call for GDP
per capita, meanwhile the independent variable X is used to call for the working
age ratio among the population. Although in real-life context, both of them
affect to each other but in this research, assume that the working age ratio depends
on natural reasons such as aging, healthcare then it can be applied as an
independent variable compared to the GDP per capita which is definitely
affected by the number of people can earn money on an economy.
So, to predict the trend of an economy, I use the data of some economies which
were successful or failed to overcome the middle-income trap in 5-years as X and
Y. Then find out the intercept and coefficient, which make a completed linear
regression that can be used to compare or analyse the trend of an economy and
evaluate its potential to pass the trap with only its labour pool or should to be
supported by other factors (such as education, technology, investment, etc).
To find the β 0intercept constant and β 1coefficient, there we have the formula: