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Prior to the 1970s the developing countries played a small role in world trade because their own economic policies hindered integration with the world economy. However, many of these countries have since changed their policies and vastly improved their importance to the global economy (World Economy, July 1992). Data (given in billions of U.S. dollars) for investigating the relationship between developing countries' and industrial countries' annual import levels are shown in the table above.
a. Fit a least squares line to the data. Plot the data points and graph the least squares line as a check on your calculations.
b. According to your least squares line, approximately what would you expect annual imports for developing countries to be if annual imports for industrial countries were $1,600 billion?
c. Calculate SSE and s2.
d. Interpret the standard deviation s in the context of this problem.
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