The economic development and international trade of North Korea using the factor analysis method

• Název práce v češtině: The economic development and international trade of North Korea using the factor analysis method
• Název v anglickém jazyce: The economic development and international trade of North Korea using the factor analysis method
• Klíčová slova: North Korea, Growth, Trade, Cointegration test, Factor analysis
• Klíčová slova anglicky: North Korea, Growth, Trade, Cointegration test, Factor analysis
• Akademický rok vypsání: 2016/2017
• Typ práce: bakalářská práce
• Jazyk práce: angličtina
• Ústav: Institut ekonomických studií (23-IES)
• Vedoucí / školitel: doc. PhDr. Julie Chytilová, Ph.D.
• Řešitel: skrytý - zadáno vedoucím/školitelem
• Datum přihlášení: 09.11.2016
• Datum zadání: 09.11.2016
• Datum a čas obhajoby: 13.06.2017 09:00
• Místo konání obhajoby: Opletalova - Opletalova 26, O105, Opletalova - místn. č. 105
• Datum odevzdání elektronické podoby: 18.05.2017
• Datum proběhlé obhajoby: 13.06.2017
• Oponenti: doc. Ing. Tomáš Cahlík, CSc.

Seznam odborné literatury

Bibliography
Byung-Yeon Kim, Seok-Jin Kim, Keun Lee (2007. 9), Assessing the Economic Performance of North Korea, 1954-1989:
Estimates and Growth Accounting Analysis, JOURNAL OF COMPARATIVE ECONOMICS
David N. Weil (2012), Economic growth(3rd edition), Routledge
Bai, J., and S. Ng (2008), “Large Dimensional Factor Analysis,” Foundations and Trends in Econometrics, 3(2): 89-163.
Forni, Mario, and Lucrezia Reichlin (1995): “Let’s Get Real: A Dynamic Factor Analytical Approach to Disaggregate
Busin~s Cycles,” CEPR Discussion Paper Series #1244
Kap-Young Jeong, Jun-Eun Kang (2008), Estimation of North Korea’s GNI by Principal Components Analysis, 비교경제
연구 제 14권 제 2호

Předběžná náplň práce

Motivation
In “Measuring Economic Growth from Outer Space” (Henderson. J) the night light data taken from satellites has been used
to measure the real income growth. The image of Korea was used as striking example. While most of the areas were
luminous in South Korea at the time, the North Korea appears dimly lit even decade since study’s publication.
I’m trying to analyze the peculiar North Korean economic development using several variables. North Korea’s trade patterns
have changed in certain ways throughout the time and my aim is to analyze how has the economic development changed
with it.
First, I will use largely accepted Cointegration method to analyze the relationship between the economic growth and
international trade. Second, I will attempt to use an open source factor analysis method to achieve more accurate results. In
doing so, I hope to extract the factors which would show common movements within the data consisting of vast number of
economic variables and decades of panel data. I will then use these factors to control the economic fluctuation in the
analysis. Finally, I will describe North Korea’s economic development analyzing the economic growth and international
trade together with using the results I will have obtained from both methods.
Hypotheses
1. The international trade takes an important role in North Korea’s economy.
2. The cointegration method can describe a relationship between trade and economic growth in North Korea.
3. The factors from the factor analysis can find out shocks among economic variables of North Korea.
Methodology
First, I will work with a dataset of real value variables including real GDP, real exchange rate and population. Data will be
made from PWT (Penn World Table), World Bank, KOSIS (Korean Statistical Information Service) and Bank of Korea. A
unit root test will be used to check for stationary process. Should the data prove to be non-stationary, I shall convert it to
stationary data. I will perform a simple descriptive statistical analysis to figure out the characteristics of data.
Secondly, I will do the cointegration test and factor analysis using this dataset. A factor model allows us to extract reference
variables from a vast sum of discrete economic variables. I will estimate common factors using the method of principal
components. Through this data reduction, I will eventually get the factors (principle components) and use them to describe
the economic development of North Korea. I will build a linear regression model using these factors to check how
international trade can affect North Korea’s economic growth. Dependent variables will be the economic growth of North
Korea and independent variables (regressor) will be the factors and trade volume (if necessary, I will divide it to import and
export).
Finally, I will describe North Korea’s economic development analyzing the economic growth and international trade together
with using the results I will have obtained from both methods.
Outline
1. Introduction and motivation
2. Literature review
3. Econometric model and data
4. Empirical results
5. Conclusions
6. References

Předběžná náplň práce v anglickém jazyce

Motivation
In “Measuring Economic Growth from Outer Space” (Henderson. J) the night light data taken from satellites has been used
to measure the real income growth. The image of Korea was used as striking example. While most of the areas were
luminous in South Korea at the time, the North Korea appears dimly lit even decade since study’s publication.
I’m trying to analyze the peculiar North Korean economic development using several variables. North Korea’s trade patterns
have changed in certain ways throughout the time and my aim is to analyze how has the economic development changed
with it.
First, I will use largely accepted Cointegration method to analyze the relationship between the economic growth and
international trade. Second, I will attempt to use an open source factor analysis method to achieve more accurate results. In
doing so, I hope to extract the factors which would show common movements within the data consisting of vast number of
economic variables and decades of panel data. I will then use these factors to control the economic fluctuation in the
analysis. Finally, I will describe North Korea’s economic development analyzing the economic growth and international
trade together with using the results I will have obtained from both methods.
Hypotheses
1. The international trade takes an important role in North Korea’s economy.
2. The cointegration method can describe a relationship between trade and economic growth in North Korea.
3. The factors from the factor analysis can find out shocks among economic variables of North Korea.
Methodology
First, I will work with a dataset of real value variables including real GDP, real exchange rate and population. Data will be
made from PWT (Penn World Table), World Bank, KOSIS (Korean Statistical Information Service) and Bank of Korea. A
unit root test will be used to check for stationary process. Should the data prove to be non-stationary, I shall convert it to
stationary data. I will perform a simple descriptive statistical analysis to figure out the characteristics of data.
Secondly, I will do the cointegration test and factor analysis using this dataset. A factor model allows us to extract reference
variables from a vast sum of discrete economic variables. I will estimate common factors using the method of principal
components. Through this data reduction, I will eventually get the factors (principle components) and use them to describe
the economic development of North Korea. I will build a linear regression model using these factors to check how
international trade can affect North Korea’s economic growth. Dependent variables will be the economic growth of North
Korea and independent variables (regressor) will be the factors and trade volume (if necessary, I will divide it to import and
export).
Finally, I will describe North Korea’s economic development analyzing the economic growth and international trade together
with using the results I will have obtained from both methods.
Outline
1. Introduction and motivation
2. Literature review
3. Econometric model and data
4. Empirical results
5. Conclusions
6. References