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A PROJECT REPORT ON Macro Level Clustering of Countries to Identify their Potential for Establishing IT & ITES Industry
SUBMITTED TO:
Ms. Amanpreet Kang Dept. of International Business SUBJECT International Economics & Policies
Table of Contents
INTRODUCTION ............................................................................................................................... 2 Macro-Level Indicators for IT and ITES Industry: ............................................................................ 2 LIST OF COUNTRIES TAKEN UP FOR STUDY: ................................................................................... 6 SPSS OUTPUT:- ................................................................................................................................ 7 Agglomeration Schedule ................................................................................................................. 9 List of Countries in Different Cluster ............................................................................................ 11 Mean of Clusters Under Variables ................................................................................................ 13 INTERPRETATION:- ........................................................................................................................ 17 STAGE-1 ............................................................................................................................................................. 17 STAGE-2 ............................................................................................................................................................. 17 CLUSTER 1: "Pioneers- The trailblazer technocrats" ......................................................................................... 18 CLUSTER 2:"Challengers- The striving bullyboy"............................................................................................... 18 CLUSTER 3: "Laggards- The shoddy Lazybones" ............................................................................................... 19 CLUSTER-4: "Mediocres- The under-achieving strugglers" ............................................................................... 19 REFERENCES: ................................................................................................................................. 20
INTRODUCTION
The objective of this project was to classify countries on the basis of various macro-economic factors that affect the establishment of IT and ITES Industry in a country. To achieve our objective, first we identified 20 macro-economic variables that play significant role in providing right environment for development of IT and ITES Industry. Then, we collected the data on these macro-economic variables for 77 countries. After that, we compiled the latest available data of the given indicator on a excel sheet. Then, the data was exported to SPSS.19 & cluster analysis was done. Finally, based on the characteristics of clusters, we have given names for each cluster.
6) ICT service exports (% of service exports, BOP) - Information and communication technology service exports include computer and communications services (telecommunications and postal and courier services) and information services (computer data and news-related service transactions). 7) Secure Internet Servers - Secure servers are servers using encryption technology in Internet transactions. 8) Mobile cellular subscribers per 100 people - Mobile cellular telephone subscriptions are subscriptions to a public mobile telephone service using cellular technology, which provide access to the public switched telephone network. Post-paid and prepaid subscriptions are included. 9) Compensation of employees (% of expense) - Compensation of employees consists of all payments in cash, as well as in kind (such as food and housing), to employees in return for services rendered, and government contributions to social insurance schemes such as social security and pensions that provide benefits to employees. 10) Communications, computer, etc. (% of service exports, BOP) - Communications, computer, information, and other services (% of service exports, BoP) cover international telecommunications and postal and courier services; computer data; news-related service transactions between residents and nonresidents; construction services; royalties and license fees; miscellaneous business, professional, and technical services; personal, cultural, and recreational services; and government services not included elsewhere. Service exports refer to economic output of intangible commodities that may be produced, transferred, and consumed at the same time. International transactions in services are defined by the IMF's Balance of Payments Manual (1993), but definitions may nevertheless vary among reporting economies. 11) Communications, computer, etc. (% of service imports, BOP) - Communications, computer, information, and other services (% of service imports, BoP) cover international telecommunications and postal and courier services; computer data; news-related service transactions between residents and nonresidents; construction services; royalties and license fees; miscellaneous business, professional, and technical services; personal, cultural, and recreational services; and government services not included elsewhere. Services imports refer to economic output of intangible commodities that may be produced, transferred, and consumed at the same time. International transactions in services are defined by the International Monetary Fund's (IMF) Balance of Payments Manual (1993), but definitions may nevertheless vary among reporting economies.
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12) Research and Development Expenditure (% of GDP) - Expenditures for research and development are current and capital expenditures (both public and private) on creative work undertaken systematically to increase knowledge, including knowledge of humanity, culture, and society, and the use of knowledge for new applications. R&D covers basic research, applied research, and experimental development. 13) Researchers in R&D (per million people) - Researchers in R&D are professionals engaged in the conception or creation of new knowledge, products, processes, methods, or systems and in the management of the projects concerned. Postgraduate PhD students (ISCED97 level 6) engaged in R&D are included. 14) Patent Applications, residents - Patent applications are worldwide patent applications filed through the Patent Cooperation Treaty procedure or with a national patent office for exclusive rights for an invention--a product or process that provides a new way of doing something or offers a new technical solution to a problem. A patent provides protection for the invention to the owner of the patent for a limited period, generally 20 years. 15) Foreign Direct Investment, net outflows (% of GDP) - Foreign direct investment are the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. This series shows net outflows of investment from the reporting economy to the rest of the world and is divided by GDP. 16) Foreign Direct Investment, net inflows (% of GDP) - Foreign direct investment are the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. This series shows net inflows (new investment inflows less disinvestment) in the reporting economy from foreign investors, and is divided by GDP. 17) Internet users - Internet users are people with access to the worldwide network. 18) Workers Remittances, receipts (BOP, Current US$) - Workers' remittances are current transfers by migrants who are employed or intend to remain employed for more than a year in another economy in which they are considered residents. Some developing countries classify workers' remittances as a factor
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income receipt (and thus as a component of GNI). The World Bank adheres to international guidelines in defining GNI, and its classification of workers' remittances may therefore differ from national practices. This item shows receipts by the reporting country. Data are in current U.S. dollars. 19) Workers Remittances and Compensation of employees, paid (Current US$) - Workers' remittances and compensation of employees comprise current transfers by migrant workers and wages and salaries earned by nonresident workers. Remittances are classified as current private transfers from migrant workers resident in the host country for more than a year, irrespective of their immigration status, to recipients in their country of origin. Migrants' transfers are defined as the net worth of migrants who are expected to remain in the host country for more than one year that is transferred from one country to another at the time of migration. Compensation of employees is the income of migrants who have lived in the host country for less than a year 20) Workers Remittances and Compensation of employees, received (Current US$) - Workers' remittances and compensation of employees comprise current transfers by migrant workers and wages and salaries earned by nonresident workers. Data are the sum of three items defined in the fifth edition of the IMF's Balance of Payments Manual: workers' remittances, compensation of employees, and migrants' transfers. Remittances are classified as current private transfers from migrant workers resident in the host country for more than a year, irrespective of their immigration status, to recipients in their country of origin. Migrants' transfers are defined as the net worth of migrants who are expected to remain in the host country for more than one year that is transferred from one country to another at the time of migration. Compensation of employees is the income of migrants who have lived in the host country for less than a year.
Nigeria Norway Pakistan Panama Paraguay Peru Philippines Poland Portugal Romania Russian Federation Saudi Arabia Serbia Slovak Republic Slovenia South Africa Spain Sweden Switzerland Tanzania
SPSS OUTPUT:DESCRIPTIVE STATISTICS N Communications, computer, etc. (% of service exports, BoP) Communications, computer, etc. (% of service imports, BoP) Compensation of employees (% of expense) Foreign direct investment, net inflows (% of GDP) 77 -29.2288 392.3369 8.014834 44.7818310 77 3.5405 53.1533 20.058014 11.0147708 77 8.9057 92.3660 33.604424 15.5391486 77 Minimum 2.0757 Maximum 71.7958 Mean 34.907684 Std. Deviation 17.2739175
Foreign direct investment, net outflows (% of GDP) GDP per capita growth (annual %) High technology exports (current US$) ICT goods exports (% of total goods exports) ICT goods imports (% of total goods imports) ICT service exports (% of service exports, BoP) Internet Users
77
77
77
549792.0000
1.5851E11
1.337278E10 2.9012661E10
77
.0048
49.0706
6.272071
10.0029936
77
1.8254
42.7614
8.919870
7.0573362
77
1.2230
38.9552
7.971393
7.2225944
77
289239.2310
1.0060E8
Literacy rate, youth total (% of people ages 15-24) Mobile cellular subscriptions (per 100 people) Patent applications, residents Research and development expenditure (% of GDP) Researchers in R&D (per million people) Secure Internet servers
77
70.869370
100.000000
95.74627457
77
32.8267
209.6399
115.248781
30.8002500
77
290081
7672.44
36395.963
77
.0261
3.4739
.986651
.9162458
77
15.828320
77
14 8
124255
9856.86
Workers' remittances and compensation of employees, paid (current US$) Workers' remittances and compensation of employees, received (current US$) Workers' remittances, receipts (BoP, current US$) Valid N (listwise)
77
4900000.0950
2.7069E10
3.077666E9
5.9401530E9
77
3200000.0480
2.2048E10
3.376910E9
4.4371203E9
77
77
Agglomeration Schedule
Cluster Combined Stage 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Cluster 1 23 12 39 57 31 9 5 23 9 12 39 23 11 37 5 4 9 58 Cluster 2 29 50 76 73 41 43 69 57 51 34 54 63 52 64 31 65 14 66 Coefficients 3.910E16 8.008E16 9.805E16 1.508E17 2.299E17 3.020E17 3.924E17 4.446E17 4.558E17 4.875E17 5.189E17 5.438E17 5.708E17 5.831E17 6.291E17 6.551E17 6.677E17 7.051E17 Stage Cluster First Appears Cluster 1 0 0 0 0 0 0 0 1 6 2 3 8 0 0 7 0 9 0 Cluster 2 0 0 0 0 0 0 0 4 0 0 0 0 0 0 5 0 0 0 Next Stage 8 10 11 8 15 9 15 12 17 21 20 28 22 24 24 27 39 30
19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62
6 39 12 11 3 5 5 46 4 5 33 18 4 8 4 2 13 3 25 8 2 13 47 21 19 2 2 13 13 8 2 19 2 8 21 2 1 24 2 1 16 21 45 10
22 71 77 27 6 37 39 61 12 23 67 58 5 62 11 30 56 4 42 49 9 17 68 60 70 18 3 25 75 74 13 46 38 47 33 59 35 26 19 28 36 24 72 16
8.535E17 9.535E17 1.002E18 1.112E18 1.298E18 1.300E18 1.324E18 1.337E18 1.452E18 2.161E18 2.431E18 3.114E18 3.136E18 3.377E18 3.483E18 4.409E18 4.817E18 5.117E18 5.292E18 6.803E18 7.873E18 8.755E18 9.814E18 1.437E19 1.481E19 1.490E19 1.810E19 2.008E19 2.239E19 2.507E19 2.543E19 3.653E19 4.434E19 4.803E19 4.846E19 5.025E19 5.272E19 6.746E19 7.512E19 8.751E19 1.018E20 1.041E20 1.157E20 1.654E20
0 11 10 13 0 15 24 0 16 25 0 0 27 0 31 0 0 23 0 32 34 35 0 0 0 39 44 40 46 38 45 43 49 48 42 51 0 0 54 55 0 53 0 0
0 0 0 0 19 14 20 0 21 12 0 18 28 0 22 0 0 33 0 0 17 0 0 0 0 30 36 37 0 0 47 26 0 41 29 0 0 0 50 0 0 56 0 59
23 25 27 33 36 25 28 50 31 31 53 44 33 38 36 39 40 45 46 48 44 46 52 53 50 45 49 47 49 52 51 57 54 64 60 57 58 60 65 68 62 66 64 65
10
63 64 65 66 67 68 69 70 71 72 73 74 75 76
40 8 2 2 8 1 2 2 40 1 2 1 40 1
55 45 10 21 20 7 8 15 44 32 48 2 53 40
1.935E20 2.525E20 2.637E20 3.212E20 4.832E20 5.007E20 5.762E20 7.898E20 8.344E20 1.399E21 2.703E21 2.871E21 3.181E21 1.336E22
0 52 57 65 64 58 66 69 63 68 70 72 71 74
0 61 62 60 0 0 67 0 0 0 0 73 0 75
71 67 66 69 69 72 70 73 75 74 74 76 76 0
POLAND PHILIPPINES PARAGUAY PANAMA PAKISTAN NORWAY NEW ZEALAND MOZAMBIQUE MOROCCO MOLDOVA MALTA LUXEMBURG LITHUANIA LATVIA KYRGYZ REPUBLIC KENYA KAZAKHSTAN JORDAN ITALY ISRAEL IRELAND HUNGARY HONG KONG SAR, CHINA GUATEMALA GREECE GEORGIA FINLAND ESTONIA EL SALVADOR EGYPT, ARAB REP.
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ECUADOR DENMARK CZECH REPUBLIC CYPRUS CROATIA COSTA RICA COLOMBIA CANADA BULGARIA BRAZIL BOSNIA AND HERZEGOVINA BELGIUM BELARUS AUSTRIA AUSTRALIA ARMENIA ARGENTINA Table 3: Different Countries under different Cluster Categories
Mean
Mean
Mean
Mean
58.4287
40.7622
27.2048
34.1218
13
36.3317
37.1707
27.7465
33.5865
6.0861
13.2084
23.9125
20.9567
.7081
1.7340
4.2605
9.2426
9.5990512127
1.0373970000 1.7005926445
4.2444179400
2.7316786994
1.4028E11
6.4480E10
1.8894E8
4.7119E9
7.8781
14.2811
.3307
5.8027
10.5816
13.9876
6.3104
8.5111
5.1350
6.3343
3.2312
8.6195
Internet Users
10839189.4840
14
99.000000
98.710253
92.768436
95.549987
117.4819
114.1724
100.7640
116.4471
168564
24061
89
1346
2.9860
1.8403
.7506
.8471
4466.852850
2792.977941
1541.249961
1701.459887
89363
44949
621
4167
1.0191E10
1.2478E10
40120620.6410
2.0485E9
6.5700E9
8.8100E9
2.5667E9
2.7362E9
1.4014399319E9
Figure 1: Dendrogram using Average Linkage (Between Groups) depicting different cluster formations
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INTERPRETATION:The output is first derived by doing a hierarchical analysis to find the number of clusters that exist in the data. In order to find the mean rating, descriptive statistics has been performed. The final step was a K-Means output with a predetermined number of clusters to be specified. STAGE-1 At first, the data was analysed with the help of descriptive statistics. From the descriptive data, we have got the mean rating of the countries based on the 20 macro-economic indicators. From the mean rating, we got the average mean for the entire set of countries which gave us an idea of the mean value of each macroeconomic variables. An agglomeration schedule helped us to identify large differences in the coefficients. From the agglomeration schedule, we use the difference between rows in a measure called coefficient in order to identify the number of clusters in the data. A large difference in the coefficients values between any two rows indicates a solution pertaining to the number of clusters which the lower row represents. Finally, based on our judgment, we chose 4-cluster solution. The dendrogram, in addition to agglomeration schedule, provides a rescaled distance measure between various clusters combines at various stages. STAGE-2 In the second stage, we performed a K-MEANS cluster. This is because a K-Means Cluster procedure generally gives more stable clusters, since it is an interactive procedure compared with the single pass hierarchical methods. The output of the K-Means Cluster gave us the initial cluster centers, the country listing of cluster membership i.e. which country belongs to which of the clusters. Based on the study, we describe each of the characteristics of 4 clusters as follows:
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REFERENCES:
TEXT-BOOKS: Nargundkar R.- Marketing Research 2nd edition Malhotra N.K.,- Marketing Research 5th edition
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