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Assessment of the correlation between Gross Fixed Capital

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  • "Assessment of the correlation between Gross Fixed Capital formationand the economic growth rate of UK, Japan, Nigeria, Brazil:Gross fixed capital formation is significantly refers to the net investment. It is the main elementof expenditure method of..

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  • "Assessment of the correlation between Gross Fixed Capital formationand the economic growth rate of UK, Japan, Nigeria, Brazil:Gross fixed capital formation is significantly refers to the net investment. It is the main elementof expenditure method of calculating the GDP. It measures the total increment in the fixedcapital. It includes expenditure on land development such as fences, roads, ditches andmachinery, equipment purchases. Removal of fixed assets is excluded from the whole(Coyle,2014).(Tejvan Pettinger, 2015)The above secondary research on United Kingdom shows that the gross fixed capital formationhas contributed to the UK economy in very recent economic recession. Investment is generallyextremely cyclical. The depressions of 1991 and 2008 noticed an effective decline in gross fixed capital formation. The firm started to cut their output rather than increase it because when therecession occurred, firm expected to earn lesser profit(Szirmai, 2015).(Tejvan Pettinger, 2015)Basically the developing countries frequently dedicate an improved percentage of GrossDomestic Product to investment. Nations with fast improvement of economic growth areseverely investing in extra fixed assets to permit quick economic growth. Among all thedeveloping countries, China has one of the largest growth of gross fixed capital formation.(Tejvan Pettinger, 2015)The china has highest improvement in GDP where Japan has lower percentage of GDPimprovement. Gross Fixed Capital Formation eliminates purchases of land and the impacts ofdepreciation. Now, the GDP is the main element of a country that depicts the economic growth of a nation. Itcalculates the size of an economy. GDP evaluations are usually applied to calculate the economicpresentation of an entire nation or region, but it also cancalculate the relative involvement of anindustry segment. This is become possible due to the measurement of GDP is more specific. It ismore focused on value added rather than sales(The World Bank, 2013).However the relationship between the two is based on the data set provided by some trustablestatistical institutes. The correlation and regression analysis has been done by the researcher onthe provided data of 15 years of the mentioned countries. This analysis will be capable toperform the role of detecting the relationship between the variables.Japan: The correlation analysis of Japan is based on the data set of the 15 years. The analysis hasbeen done by using the software, Ms Excel.CountryName GDP Capital2000 2.257495 0.6762232001 0.355462 -2.103112002 0.289548 -4.902342003 1.685112 0.1773072004 2.36073 0.3949972005 1.302728 0.8455612006 1.692904 1.5086982007 2.192186 0.3141622008 -1.04164 -4.106992009 -5.52698 -10.59092010 4.65203 -0.242372011 -0.45272 1.3828582012 1.75369 3.4086832013 1.613367 3.162453(The World Bank, 2015) "

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