Regional Innovation and Economic Development

This assignment requires a critical analysis of how innovation, particularly in peripheral regions, contributes to economic development. Students must examine the interplay between macroeconomic conditions, regional structural factors, and short-term economic performance. The research should draw upon relevant literature and potentially include case studies or empirical evidence to support its arguments.

A Geographical Analysis of Global
financial crisis within Core vs Periphery
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TABLE OF CONTENTS
CHAPTER -1 INTRODUCTION ...................................................................................................4
1.1 Background............................................................................................................................4
1.2 Problem statement..................................................................................................................5
1.3 Research aim..........................................................................................................................5
1.4 Research objectives................................................................................................................5
1.5 Research questions.................................................................................................................6
1.6 Significance of research.........................................................................................................6
1.7 Dissertation structure.............................................................................................................6
CHAPTER- 2 LITERATURE REVIEW ........................................................................................8
2.1 Introduction............................................................................................................................8
2.2 Concept of global financial crisis..........................................................................................8
2.3 Impact of global financial crisis on core countries & periphery countries............................9
2.4 Recovery from global financial crisis for core countries & peripheral countries................10
2.5 Comparison of economic stability post and pre-crisis for the core and peripheral countries
....................................................................................................................................................11
2.6 Dependency between two sets of economies.......................................................................12
CHAPTER- 3 RESEARCH METHODOLOGY ..........................................................................13
3.1 Introduction..........................................................................................................................13
3.2 Research philosophy............................................................................................................13
3.3 Research approach ..............................................................................................................13
3.4 Research methods ...............................................................................................................14
3.5 Data collection.....................................................................................................................14
3.6 Data analysis .......................................................................................................................15
3.7 Reliability and validity.........................................................................................................15
3.8 Ethical consideration............................................................................................................16
3.6 Research limitation..............................................................................................................16
CHAPTER- 4 DATA ANALYSIS AND FINDINGS ..................................................................18
4.1 Introduction..........................................................................................................................18
4.2 Quantitative analysis............................................................................................................18
CHAPTER- 5 RECOMMENDATION AND CONCLUSION ....................................................33
5.1 Conclusion...........................................................................................................................33
5.2 Recommendation.................................................................................................................33
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REFERENCES..............................................................................................................................34
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CHAPTER -1 INTRODUCTION
1.1 Background
The economic downturn of 2007- 2008 that is also referred to as global financial crisis.
Further 2008 financial crisis is regarded as worst financial crisis since the great depression of
1930s. It started in the year 2007 with the crisis in subprime mortgage market within USA as
well as developed into fuller down international banking crisis along with the collapse of
investment bank Lehman Brothers on September 15th 2008. Greater risk that is being taken by
bank like Lehman Brothers assisted in magnifying the financial influence globally. The crisis
was being followed by global economic downturn, the great recession which is considered as the
term that demonstrates sharper decline within economic activity during late 2000s. It is
considered as the the largest downturn since Great depression (Hale and Obstfeld, 2016). The
concept of great recession is applicable to US recession officially that lasts from December 2007
to June 2009. The economic slump started when the US housing market went from boom to bust
and greater amount of mortgage backed securities as well as derivatives have lost their
significant value.
During boom in American housing in the mid-2000s, financial institutions began towards
marketing backed securities as well as sophisticated derivative products at unprecedented levels.
However, the market of real estate collapsed in the year 2007. Such securities declined in the
value, the solvency leveraged the banks as well as financial organizations within US as well as
Europe. Although, the global economy was feeling grip of a credit crisis which has been
unfolding since 2007, things have emerged with the bankruptcy of Lehman brothers, the
country's fourth largest investment bank. Because of great recession, US has alone shed more
than 7.5 million jobs which has resulted in causing unemployment rate to double. Moreover,
American households lost $16 trillion of the net worth as a result of stock market plunge. When
investigation was being carried out in relation with the causes of financial crisis, it has been
determined that role of interest is major (Gilpin, 2016). It has been argued that the credit rating
agencies as well as investors have failed to price the risk in an accurate manner which is
associated with mortgage relating financial products. Along with this, government does not
adjust the regulatory practices for addressing financial markets of 21st century.
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Present research dissertation will assess the relevance of dependency theory in explaining
the severity of impact of Great Recession of 2007-08 on peripheral countries. This has been a
severe crisis and has dominated discussions in both academic papers and financial press ever
since its inception. The crisis started from private firms’ and banks’ balance sheets and
burgeoned into a full-blown housing crisis in the US. It has surged across national boundaries
due to strong financial and trade linkages with rest of the world (including both core and
peripheral countries), wiping out economic progress in many Low-income countries of recent
years. It is important to ascertain if these countries would be better by following the restrictions
to trade and capital flows proposed by the dependency theory.
1.2 Problem statement
There is greater dependency of periphery nation on the core countries. This is considered
as the major issue. Though small countries are not directly involved in making investment but
this is being carried out by the core countries (Crescenzi, Luca and Milio, 2016). As a reason of
their dependency, there is the major issue that is being faced by country which affects the
financial stability of small nations to a high extent. Although, developed countries have potential
to cope up with such situation but there is lack of ability in the underdeveloped nations to
overcome with these conditions.
1.3 Research aim
Main aim of present thesis is To carry out geographical analysis of global financial crisis within
Core vs. Periphery.
1.4 Research objectives
The objectives of present dissertation are:
 To evaluate the impact of global financial crisis on core and periphery countries
 To evaluate recovery from global financial crisis for core and peripheral countries
 To compare economic stability post and pre-crisis for the core and peripheral countries
 To assess the dependency between two set of economies
1.5 Research questions
 What is the impact of global financial crisis on core and periphery countries?
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 How do the core and peripheral countries recover from the global financial crisis?
 What is the comparison in between economic stability post and pre-crisis for the core and
peripheral countries?
1.6 Significance of research
The present thesis is significant in assessing the Global financial crisis within Core vs.
Periphery. Further, it act as an aid in making determination of the stability post and pre-crisis for
core and peripheral countries. The importance of present dissertation is as below:
 The present thesis will be helpful for the academicians in carrying out PH.D. Moreover, it
provides huge knowledge with respect to feasibility of the subject matter.
 Along with this, it has high importance for the specialists of economics in gaining in-
depth knowledge regarding the financial crisis and its impact on both core and periphery
countries.
 Present thesis has significance for the thinkers in making reflection of information with
respect to tools that can be executed in the research.
1.7 Dissertation structure
Present dissertation includes various chapters that have suitability in accomplishment of
the research in an effective manner. Chapters that will be included in present thesis are
enumerated in the manner stated as under: Chapter- 1 Introduction: It is the beginning section of dissertation. It includes overview
in relation with the phenomenon in subject. Section demonstrates the framework in
relation to subject in the research. The beginning of chapter covers the overview of topic
which is required to be researched. This is comprised of in depth knowledge with respect
to phenomenon in subject. Along with this, it involves the aim as well as objectives of
research which are based on questions related with the subject matter researched study. Chapter- 2 Literature review: It is considered as the crucial section of thesis that includes
opinions of various investigators with respect to global financial crisis. The chapter of
literature review makes evaluation of various information and knowledge that are
demonstrated from the piece of work which is already prevailing in the secondary form of
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sources. Based on the published information, in-depth analysis in relation with the subject
matter in investigation will be included in this section. Chapter- 3 Research methodology: As per the research objectives, in present thesis,
chapter is comprised of tools which can be executed by the analyst while carrying out the
investigation. Chapter includes tool that can be executed by the investigator. Along with
this, chapter comprises of justification in relation with the choice of specific tool within
research. Chapter- 4 Data analysis and findings: This particular chapter involves information that
is collected by the means of sources like primary as well as secondary. The particular
chapter will make scrutiny of data that will be gathered. Data analysis as well findings
section are important in the present research as it would act as an aid in attaining the
accurate results of study.
 Chapter- 5 Conclusion and recommendation: This particular section is the last part of
dissertation which reflects results that are attained through analysis of information. Along
with this, specific section involves suitable suggestions that can help in resolving the
problem that is related with investigation.
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CHAPTER- 2 LITERATURE REVIEW
2.1 Introduction
After the chapter of introduction, another part of thesis comprises of review of literature.
The particular section is considered as an important chapter of thesis. In this, viewpoints of
various researchers with respect to subject matter in the research is reflected in an appropriate
way. The secondary data is utilized in order to collect plenty of data. It is considered as the base
which helps in conducting research in future. Through review of literature, the gap within
research carried out in past is examined with greater effectiveness. Along with this, chapter
includes evaluating the opinions of investigator in a critical way. Thus, by this, solid academic
base is devised with respect to phenomenon in the investigation. With the present thesis,
literature review will involve the impact of global financial crisis on core and periphery
countries. In addition to this, it would involve recovery from global financial crisis by developed
and less developed nations
2.2 Concept of global financial crisis
Global financial crisis or international economic catastrophe has begun in July 2007 with
the credit crunch. This is being caused with a loss of confidence by investors of US in the value
of subprime mortgages that is a reason of liquidity crisis. This has led to US federal bank
injecting larger amount of capital into financial markets. By September 2008, the situation of
crisis got worse as stock market across globe crashed as well as became highly volatile. The
confidence among customers hit the rock bottom as everyone tightened their belts in fear of what
can lie ahead. Market related with housing in the US has experienced this situation to a high
extent as several owners of house who have taken loans found that they are not able to meet the
mortgage repayments (Parnreiter, 2016). As the home’s value plummeted, it was being found by
the borrowers that there is presence of negative equity by themselves. With greater borrowers
defaulting on loans, banks were facing situation where the repossessed house as well as land
were worth lesser on the today's market in comparison with the bank that has loaned out in
original terms. There has been liquidity crisis in the hands of bank and there is greater difficulty
in giving and attaining home loans as a reason of fallout from the subprime lending bubble burst.
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This is considered as the credit crunch. Though there is collapse in the housing within United
States that serves as trigger for the global financial crisis, certain experts who have asserted
events over the past few years and also, the politicians in US believed that financial crisis was
indeed required better regulation for the purpose of discouraging unscrupulous lending. The
impact of great recession on emerging nations has been detrimental but no uniformly so.
Peripheral economies of European Union are still reeling from the crisis but regions in Emerging
Asia have recovered. Some suggested that it was due to their learning from the Asian financial
crisis 1997 when they realized that have open capital account and allowing free outflow of
capital during financial recession could be hurtful for the economy (Mawdsley, 2016). This time,
almost all Asian countries raised barriers to capital flows and incentivized their exporters to
overcome the global trade bust. Given this divergence in peripheral performance, it seems
opportune to test validity of dependency theory in explaining the impact of recent global
financial crisis.
2.3 Impact of global financial crisis on core countries & periphery countries
In accordance with the views of Calignano and Hassink, (2016) situation of global
monetary crisis has high level of impact on periphery countries rather than highly developed.
From assessment, if has been identified by authors that there was significant reduction in trade
expansion or opportunities. In the year of 2009, trade growth rate of periphery countries reduced
from 9.3% to 4.1%. It was not a good indicator because declining trade or export aspects closely
influence the situation regarding balance of payment. On the contrary to this, Isaksen and
Karlsen, (2016) stated that situation of crisis placed negative impact on stock or investment
market. Moreover, after the recessionary period portfolio investment had fallen down to a great
extent. Due to this, flow of money supply in then developing countries affected negatively. The
main reasons behind this, due to the declining trend of stock market risk aversion people laid
emphasis on keeping money on their houses and banks. Further, global financial crisis also
resulted into high incline in the interest rates. Hence, all these are the main impacts that global
crisis situation placed on periphery countries South Africa, India and China.
Fricke and Lux, (2015) have assessed in their study that financial crisis negatively
affected employment opportunities. Moreover, due to the reduction in trade and export
opportunities employment level was negatively affected after recessionary period. Hence, due to
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such situation lifestyle or living of standard, spending pattern of people etc. affected to the
significant level. Moreover, usually people prefer to spend money on luxury when they have
enough disposable income. Knox, Agnew and McCarthy, (2014) claimed that current account
deficit inclined after the occurrence of monetary crisis. There are several periphery countries
which are facing high deficit such as 5% and 10% of GDP. Hence, economies which are facing
high level of deficit are recognized as vulnerable.
In accordance with the views of Crescenzi, Luca and Milio, (2016) crisis occurred
in 2008 placed short term impact on developed countries such as UK, US, Germany and Canada.
Moreover, core countries are the one having sound strategic and competent framework. Thus,
such countries have ability in relation to how to deal with the undesirable situation or crisis.
Hence, by considering such aspect it can be stated that condition of financial crisis does not have
high level of impact on core countries. On the contrary to this, Glückler, (2014) presented that
government or political authorities also feel pressure when the condition of monetary crisis
happens. The main reason behind this, due to having accountability in relation to economic
growth and development government authority has to make changes in both fiscal and monetary
policies. Thus, it can be said that financial crisis has major on periphery rather than core
countries.
2.4 Recovery from global financial crisis for core countries & peripheral countries
Agnew, (2014) found in their study that slow growth has taken place in the GDP and
overall development of periphery countries. Government of periphery countries has taken several
actions such as reduction in taxation etc. Moreover, tax is the main factors that have high level of
impact on the profit margin and overall framework of business unit. By considering such aspect,
with the motive encourage more investment government authorities have reduced tax rate
significantly. However, it is to be critically evaluated by Crescenzi, Luca and Milio, (2016) that
due to slow growth in labor force periphery countries failed to get desired level of outcome or
success.
The crisis which occurred and impacted various countries have more effect on those
nations which were largely dependent on external demands. According to Hale and Obstfeld,
(2016) there was a need to develop the economy which is based on a sound balance of both
domestic and external demands. Thus, various agendas were set and the countries came with a
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solution to make modifications in a number of policies that can help in bringing the stability and
balances. The major impact was apparent on the periphery countries while for assisting in the
recovery, IMF also supported the countries. Thus, IMF developed some programs in which the
major aim was set to put control on the macro economic policies so as to bring the stability in the
exchange rates and inflation.
2.5 Comparison of economic stability post and pre-crisis for the core and peripheral countries
The theory of dependency presented that world has been categorized into two parts. This
involves core and periphery. Further the flow of resources is from periphery to core. Therefore it
enriches core at the expenses of periphery. his theory arose as a reaction to the modernization
theory which promulgated a standard path of development for all societies, and that
underdeveloped nations of today are in a similar situation as developed nations were at some
time earlier. Dependency theory refutes this view, and argues that underdeveloped countries have
their unique features and structures and they are in this situation because of core (developed)
countries. In accordance with the views of Gilpin, (2016) it has been examined that peripheral
nations are being exploited as destination having obsolete technology. They offer natural
resources, cheap labour as well as markets for the developed nations without which it does not
have standard of living they enjoy. While, Wealthy nations actively perpetuate a state of
dependence on the periphery by influential means of media, banking and finance, education,
culture, and sport etc.
There is visible evidence of this relationship between the Eurozone’s core and periphery.
As part of the currency union and the single market, the Mediterranean countries of Portugal,
Greece, Italy and Spain provided a worthy destination for German exports (of cars and other
manufactured goods) allowing Germany to enjoy higher standard of living, and now it is the
same region whose banks are under stress and unemployment is high. When making comparison
of the economies it has been assessed that impact on developing nation is more in comparison
with that of developed nations. Though they directly are not involved in making investment. But
as developed economy takes the resources for developing thus there is an indirect impact on less
developing nation that is resulted in creating greater on the countries. In case of US before crisis
there was stable situation. But after that there was greater decline in the stability of nation and
has affected the economy to a greater extent.
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2.6 Dependency between two sets of economies
The differences between the economies of core and periphery countries raise due to the
dependency and various theories which are existing between them. According to Crescenzi, Luca
and Milio, (2016) in the core countries, there economies have more dynamic nature and they
tend to get the stimulation of growth from the internal factors. On other hand, the economies of
periphery countries demonstrate the opposite nature. They get stimulation for growth factors
from the components which are external to the economy. Parnreiter, (2016) have argued that the
economic growth of the periphery countries are slower because of the high development rates in
the core countries. This necessitates the developing countries to make themselves less dependent
on the core countries and indulge in the free trades. For this, it is crucial for these countries to
have a strict control on the foreign investments done by core countries. In this view, it has been
further added that the situations which are set up by these core countries have a direct impact on
the periphery countries. Because of this, the concept of dependency is defined by Mawdsley,
(2016) as the condition where economy of a specific nation is shaped and designed by the growth
and expansion of some other country's economy. Thus, it came into existence as the dependency
of periphery countries on core nations. Here, it is also evident that those countries which are
dependent on the core countries for their development and growth cannot make expansion in
their economies on independent basis. This may show the profits and positive impacts in the
short run but the same situation is not favorable on long term basis. Like in present situation, the
development of periphery countries like India, China and South Africa is largely dependent on
the core nations like USA, UK, Canada and Germany. All these nations have various trade
relations with each other while the core countries have more developed economies. The
periphery nations take assistance of foreign investments in their country so that they can have
some development and growth opportunities. Thus, to make growth on independent basis is not
possible for these periphery nations without core countries. In addition to this, the core countries
have the powers to control the prices according to which they make various modification in the
rates of export prices. Thus, they hold the position of monopoly powers to some extent. Thus, in
such conditions, periphery nations have to tolerate more burden of these increased costs and the
situations of trade becomes unfavorable for such countries.
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CHAPTER- 3 RESEARCH METHODOLOGY
3.1 Introduction
This is considered as another part of thesis which is referred to as research methodology.
It is considered as the way through which the solution to a specific issue under investigation is
investigated with greater effectiveness. Within the section of methodology greater number of
tools and techniques are employed in order to attain evidence and carry of analysis for the sake
of responding in relation with question for the research (Mackey and Gass, 2015). Within the
present investigation that aims at carrying out geographical analysis of global financial crisis
within Core vs. Periphery the selection regarding the research method is being carried out in an
attentive way. Discussion is being done regarding the methods that are used in the investigation.
In addition to this justification to the selection of particular technique is provided. The
investigator has utilized several tools for collection as well as evaluation of the secondary data
which is gathered from published information by world bank.
3.2 Research philosophy
The research philosophy of the research is used to demonstrate the sources and nature of
study undertaken throughout the process (Panneerselvam, 2014). Thus, research philosophy
helps in making a basis for developing the knowledge base of the entire research process so that
various beliefs and assumptions can be developed for completing the aims and objectives set in
the research. There are two types of philosophy which are Interpretivism and Positivism theory.
In interpretivism, the researcher attempts to make a study on the set beliefs in the society so that
a socially constructed thinking can be studied and justified. While in positivism theory, the
researcher makes a study on the facts and current issues prevailing in the society.
In present research, the positivism theory has been adopted for study purpose, where
efforts have been made to have a deeper insight on the Global financial crisis along with its
impact on core and periphery countries (Neuman and Robson, 2012). Thus, with the help of this
approach, it generalizes the explanation of causes and effects which helps in understanding the
entire concept of crisis.
3.3 Research approach
The research approach makes the way for conducting the study in a more detailed manner
so that the study can be conducted in more appropriate way. Thus, the approach helps in
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undertaking the method which will be followed for making study on the topic and accomplishing
objectives. There are two major approaches of research which are Inductive and Deductive. The
inductive approach of research does the study on the basis of observations and are based on
various approaches and theories. Thus, it attempts to develop the study through explanation of
particular theories and models (Dunne, 2011). In addition to this, here the researcher will make
efforts to identify the pattern and various relationships as well on the topic. On other hand, the
Deductive approach of research makes the study on the basis of formulation of hypothesis. Thus,
with the help of various propositions, the deductive approach makes a conclusion. In present
research, the deductive approach has been adopted according to which, the hypotheses will be
formulated to conduct the entire study. With the help of a number of sources, the approach will
be applied so that deduction can be made to teach at a conclusion.
3.4 Research methods
The research methods form a significant part of the research in which a particular method
is applied for making the analysis of collected data (Choy, 2014). There are two types of research
which are embraced in a research which are qualitative method and quantitative method. The
qualitative method of research is done for analyzing the data in the form of narrative style. Thus,
the researcher makes description of entire study and analyses the data and available materials.
While on other hand, the quantitative method of research makes study on the basis of numerical
analysis. The study is done on specific themes and patterns so that an accurate result can be
obtained. In addition to this, it also helps in making examination based on inferential statistics so
that the results are more valid an reliable (Stevenson, 2010).
In present case, the study has been done through quantitative method in which various
statistical tools are applied for analyzing the available data and resources. Apart from this, the
research findings have been demonstrated through various implications like tables, figures,
charts etc.
3.5 Data collection
Data is the main input of research which in turn helps scholar in assessing the suitable
solution of issue. Research data can be distinguished into two types such as primary and
secondary which helps researcher in conducting in-depth investigation of issue. Hence, primary
data implies for the one which scholar gathers with the motive to fulfill the aims and objectives
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of research. Observation, survey, focus group etc. are the main methods which help in gathering
suitable data that is tailored according to research objectives or purpose (Roberts, 2013). On the
other hand, secondary data may be defined as one that has gathered, analyzed and presented by
other scholars. Main data sources of secondary information include books, journals and scholarly
articles. Along with this, by evaluating or analyzing the reports published by government scholar
can collect secondary data.
To evaluate the extent to which situation of global financial crisis has placed impact on
core and periphery countries data has been gathered by the researcher from secondary sources.
Hence, data regarding the population, interest rate and inflation has been gathered by researcher
the report which is published by World Bank. The main reason behind undertaking such source
is that information published in the report of World Bank highly reliable as well as appropriate
(Chawla and Sodhi, 2011). Thus, data regarding GDP, interest rate and inflation have been
gathered by scholar to analyze the impact of financial crisis on both core and periphery countries.
3.6 Data analysis
Process which is undertaken by scholar to evaluate or analyze the gathered data is highly
significant. Moreover, effectiveness of outcome is highly influenced from type of data analysis
technique used by the researcher. Hence, selection of technique is highly based on the type of
investigation undertaken such as qualitative or quantitative. To analyze qualitative data set
researcher can undertake thematic perception test technique. On the basis of this aspect,
researcher makes analysis of data by preparing several themes and support findings from brief
prepared in literature review section (Soni and Kodali, 2012). On the other side, SPSS tools and
techniques are employed by researcher to determine solution from quantitative data set. Hence,
by taking into account the research type SPSS tools have been selected by scholar. Thus, solution
of research issue has been presented by scholar by applying the tools like ANOVA, regression
etc. Hence, by applying the regression dependency of one set of economies on another has been
assessed by scholar through regression analysis.
3.7 Reliability and validity
Both these are the most effectual elements which are highly associated with the
effectiveness of study. Hence, to ensure high level of reliability no manipulation has done by
scholar in data set (Groenewold and Lessard-Phillips, 2012). It shows that data gathered and
15

analyzed by scholar is highly reliable in nature. Further, to develop understanding regarding the
research area data has been gathered by researcher from highly websites. The main reasons
behind this, authentic sites provide researcher with highly reliable information for decision
making. Further, proper citation has been done by researcher of the related source. This aspect
entails that study and its findings are new rather than copied from somewhere else. Along with
this, citation presents that data has been rephrased by researcher to develop brief thesis about
topic. By considering all such aspects it can be presented that proper reliability and validity has
been maintained by researcher (Mackey and Gass, 2015).
3.8 Ethical consideration
This is considered as most important section of thesis that is required to be considered by
the investigator. The present research is accomplished by considering the ethical norms in an
appropriate way. When carrying out the present dissertation the ethical norms which are
considered are as follows: Restricted access: For the present dissertation on geographical analysis of global
financial crisis within Core vs. Periphery the collection of data has been done through
secondary sources. This is in order to gather relevant information attached with the
subject. There is presence of these studies on several sites. Further access to some sites is
restricted (Dunne, 2011). In this regard prior permission has been taken by the
investigator in prior for getting access to specific sites.
 Citation of work in proper manner: For the present thesis the research work of various
authors have been taken into account. With the citation of the work in an effective
manner the ethical consideration taken into account has been made sure. The copying and
pasting of the content has not been done. Rather rephrasing in appropriate way has been
done and the information has been written in own words.
3.6 Research limitation
The research limitations show various shortfalls which were faced by the researcher in
conducting the study. These limitations may pose various challenges in completing the research
and study in desired manner (Choy, 2014). Thus, it is advisable to mention these limitations in
the report so that its credibility can be justified. In present research, there were various
limitations which were faced while conducting the study which are as follows:
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 Time factor: The major limitation in the present study was faced in the form of limiting
time factor. The topic selected for conducting the research is enough vast and includes
various areas that must be considered in the study. While, due to limited time-frame, only
very important and major aspects have been included in the study because of which many
issues and other areas have been missed.
 Inadequate secondary sources of data: As per the present research, efforts were made to
collect the secondary data from a number of sources. Yet they were not enough to
conduct a proper and appropriate study that can give exact results. Thus, the research has
been conducted with the help of limited data available for study so that results can be
based on them.
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CHAPTER- 4 DATA ANALYSIS AND FINDINGS
4.1 Introduction
The data analysis is the most crucial part of entire research and study which involves the
analysis and interpretation of collected data and information. This forms an important part where
various tools and method will be applied on the data so that an analysis can be conducted on
available resources. On this basis, the results are obtained in which the attempt is made to cover
all the set objectives and aims of entire research. In the present research, data analysis have been
done with the help of SPSS under which the regression analysis is performed on the data. In this
analysis, GDP, inflation and interest rates have been studied and their trends have been shown
before the crisis occurred. Thus, it helped in an analyzing the impact of all these trends on both
core and periphery countries before and after the financial crisis. On the basis of this analysis,
various interpretations have been made which helped in accomplishing set objectives and reach
at a conclusion.
4.2 Quantitative analysis
Objective: To evaluate the impact of global financial crisis on core countries & periphery
countries.
H0: There is no significant difference between GDP, interest rate and inflation of developed
economies before and after crisis.
H1: There is significant difference between GDP, interest rate and inflation of developed
economies before and after crisis.
Developed nations inflation rate
Regression
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 AverageGDPofdevelopednationsb . Enter
a. Dependent Variable: Meaninflationrateofdeevlopednations
b. All requested variables entered.
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .467a .218 -.043 .94182
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a. Predictors: (Constant), AverageGDPofdevelopednations
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression .741 1 .741 .836 .428b
Residual 2.661 3 .887
Total 3.402 4
a. Dependent Variable: Meaninflationrateofdeevlopednations
b. Predictors: (Constant), AverageGDPofdevelopednations
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) -9.536 12.705 -.751 .507
AverageGDPofdevelopednat
ions 2.107E-012 .000 .467 .914 .428
a. Dependent Variable: Meaninflationrateofdeevlopednations
Interpretation
R and R square value is 0.467 and 0.218 which means that inflation rate get changed by
21% when slight change comes in the GDP. Level of significance is 0.428 which indicate that
there is no significant difference between independent and dependent variable. This means that
there is no big difference in the growth rate of GDP and inflation rate.
Developed nations interest rate
Regression
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 AverageGDPofdevelopednationsb . Enter
a. Dependent Variable: Interestratemeanvalueindevelopednations
b. All requested variables entered.
Model Summary
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Model R R Square Adjusted R Square Std. Error of the Estimate
1 .044a .002 -.331 1.94563
a. Predictors: (Constant), AverageGDPofdevelopednations
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression .022 1 .022 .006 .944b
Residual 11.356 3 3.785
Total 11.378 4
a. Dependent Variable: Interestratemeanvalueindevelopednations
b. Predictors: (Constant), AverageGDPofdevelopednations
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 5.984 26.247 .228 .834
AverageGDPofdevelopednat
ions -3.609E-013 .000 -.044 -.076 .944
a. Dependent Variable: Interestratemeanvalueindevelopednations
Interpretation
There is low correlation between interest rates and GDP as reflected by low value of R
and R square which is 0.44 and 0.2%. Significance level is 0.944>0.05 which means that there is
no significant difference between mean values of the dependent and independent variables. Thus,
rate of change in GDP and interest rate is almost same.
Developing nation’s inflation rate
Regression
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 AverageGDPofdevelopingnationsb . Enter
a. Dependent Variable: Meaninflationrateofdevelopingnations
b. All requested variables entered.
20

Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .482a .232 -.023 1.63676
a. Predictors: (Constant), AverageGDPofdevelopingnations
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression 2.434 1 2.434 .909 .411b
Residual 8.037 3 2.679
Total 10.471 4
a. Dependent Variable: Meaninflationrateofdevelopingnations
b. Predictors: (Constant), AverageGDPofdevelopingnations
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 3.264 3.173 1.029 .379
AverageGDPofdevelopingna
tions 1.473E-012 .000 .482 .953 .411
a. Dependent Variable: Meaninflationrateofdevelopingnations
Interpretation
Correlation value is 0.48 and facts revealed that with change in GDP 23% change comes
in the inflation rate. However, significant difference is not observed between both variables in
terms of rate of change. It can be said that moderately GDP affects inflation rate in the nation.
Developing nation’s interest rate
Regression
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 AverageGDPofdevelopingnationsb . Enter
21

a. Dependent Variable: Meaninflationrateofdevelopingnations
b. All requested variables entered.
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .482a .232 -.023 1.63676
a. Predictors: (Constant), AverageGDPofdevelopingnations
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression 2.434 1 2.434 .909 .411b
Residual 8.037 3 2.679
Total 10.471 4
a. Dependent Variable: Meaninflationrateofdevelopingnations
b. Predictors: (Constant), AverageGDPofdevelopingnations
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 3.264 3.173 1.029 .379
AverageGDPofdevelopingna
tions 1.473E-012 .000 .482 .953 .411
a. Dependent Variable: Meaninflationrateofdevelopingnations
Interpretation
In present case also there is moderate relationship among the variables as correlation is
0.48 which is less than 0.50 and R square valued at 23%. Level of significance is again already
higher than 0.05 and this means that there is no big difference between rate of change that occur
in the dependent and independent variable.
It can be observed that value of slope in case of inflation rate in developed and
developing economies is 2.10 and 1.47. On other hand, slope value in case of interest rate in
developed and developing nations is -3.60 and 1.47. This reflect that there was high impact of
22

financial crisis on developed nations then developing nations. Inflation rate get changed by 2.10
points with change in GDP in developed economies. Whereas, in developing nations same get
changed by only 1.47 points. Interest rates were curtailed sharply in developed nations so that
more and more business firms can be promoted to expand their business and bring same on
growth track relative to developing nations. All these things revealed that financial crisis have a
huge impact on developed nations then developing nations. This happened because developed
nations economy is more globalized then developing nations.
Objective: To evaluate recovery from global financial crisis for core countries & peripheral
countries
H0: There is no significant difference between mean values of GDP and interest rate as well as
inflation before crisis in case of developed economies.
H1: There is significant difference between mean values of GDP and interest rate as well as
inflation before crisis in case of developed economies.
H0: There is no significant difference between mean values of GDP and interest rate as well as
inflation before crisis in case of developing economies.
H1: There is significant difference between mean values of GDP and interest rate as well as
inflation before crisis in case of developing economies.
Before crisis inflation developed nations
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 AverageGDPofdevelopednationsb . Enter
a. Dependent Variable: Meaninflationrateofdeevlopednations
b. All requested variables entered.
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .762a .581 .162 .41012
a. Predictors: (Constant), AverageGDPofdevelopednations
ANOVAa
23

Model Sum of Squares df Mean Square F Sig.
1
Regression .233 1 .233 1.386 .448b
Residual .168 1 .168
Total .401 2
a. Dependent Variable: Meaninflationrateofdeevlopednations
b. Predictors: (Constant), AverageGDPofdevelopednations
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) -4.416 5.964 -.740 .594
AverageGDPofdevelopednat
ions 1.272E-012 .000 .762 1.177 .448
a. Dependent Variable: Meaninflationrateofdeevlopednations
Interpretation
From the above table, it has been assessed that R and R square in relation to GDP and
inflation rate of developed nations are .76 & .58 respectively. It presents that GDP and inflation
rate are correlated with each other to the significant level. On the basis of this aspect, if changes
take place in one factor then other will be influenced by with the rate of 58%. Along with this,
level of significance is higher than the standard value 0.05 which entails that null hypothesis is
accepted. Hence, it can be stated that there is no significant difference in the mean value of GDP
and inflation rate of core countries. Further, beta value entails that if changes take place in GDP
then value of inflation rate will be influenced by 1.272E-012.
Before crisis interest
Regression
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 AverageGDPofdevelopednationsb . Enter
a. Dependent Variable: Interestratemeanvalueindevelopednations
b. All requested variables entered.
24

Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .108a .012 -.977 .82530
a. Predictors: (Constant), AverageGDPofdevelopednations
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression .008 1 .008 .012 .931b
Residual .681 1 .681
Total .689 2
a. Dependent Variable: Interestratemeanvalueindevelopednations
b. Predictors: (Constant), AverageGDPofdevelopednations
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 6.470 12.001 .539 .685
AverageGDPofdevelopednat
ions -2.354E-013 .000 -.108 -.108 .931
a. Dependent Variable: Interestratemeanvalueindevelopednations
Interpretation
From statistical analysis, it has been assessed that R of GDP and interest before the
situation of crisis accounts for .10. It presents that highly lower correlation takes place between
GDP and interest rate of core countries. Further, minute changes will take place in the interest
rate if changes occur in GDP such as 1%. In this case, level of significance is .68 which entails
that alternative hypothesis is rejected. Further, value of Beta is -2.354E-013 significantly which
entails that independent variable such as GDP does not have high level of impact on dependent
variable such as interest rate.
After crisis inflation developed nations
25

Regression
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 GDPDNb . Enter
a. Dependent Variable: InflationDN
b. All requested variables entered.
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .534a .286 -.429 .97279
a. Predictors: (Constant), GDPDN
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression .378 1 .378 .400 .641b
Residual .946 1 .946
Total 1.325 2
a. Dependent Variable: InflationDN
b. Predictors: (Constant), GDPDN
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1 (Constant) 2.045 .972 2.103 .283
GDPDN -1.369E-013 .000 -.534 -.632 .641
a. Dependent Variable: InflationDN
Interpretation
The above mentioned table presents that R and R square is .53 & .28 respectively. This
aspect shows that both GDP and interest rates are moderately correlated with each other. By
taking account such outcome it can be stated that both GDP and interest rate will move in similar
direction to some extent. Further, it can be said that percentage entails that GDP has impact on
26

interest rate by 28% if changes take place in other variables. Further, tabular presentation shows
that level of significance is 0.64 which presents that null hypothesis accepted. From secondary
data investigation, it has been assessed that to enhance GDP higher authorities of countries place
more emphasis on controlling the interest rate. Moreover, interest rate is the major tools which in
turn help in exerting control on flow of money supply to the significant level.
After crisis interest developed nations
Regression
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 GDPDNb . Enter
a. Dependent Variable: InterestDN
b. All requested variables entered.
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .944a .892 .784 .50614
a. Predictors: (Constant), GDPDN
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression 2.115 1 2.115 8.256 .213b
Residual .256 1 .256
Total 2.371 2
a. Dependent Variable: InterestDN
b. Predictors: (Constant), GDPDN
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
27

B Std. Error Beta
1 (Constant) 4.004 .506 7.913 .080
GDPDN -3.237E-013 .000 -.944 -2.873 .213
a. Dependent Variable: InterestDN
Interpretation
Outcome of regression analysis presents that after the situation of crisis, GDP has high
level of impact on the interest rate of developed nations. Value of significance such as .21 shows
that null hypothesis is accepted and other one is rejected. Beta value such as -3.692E-012 also
entails that after crisis GDP level does not have significant impact on dependent variable.
H0: There is no significant difference between GDP, interest rate and inflation of developing
economies before and after crisis.
H1: There is significant difference between GDP, interest rate and inflation of developing
economies before and after crisis.
Before crisis developing nations inflation rate
Regression
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 AverageGDPofdevelopingnationsb . Enter
a. Dependent Variable: Meaninflationrateofdevelopingnations
b. All requested variables entered.
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .997a .993 .986 .26601
a. Predictors: (Constant), AverageGDPofdevelopingnations
ANOVAa
Model Sum of Squares df Mean Square F Sig.
28

1
Regression 10.103 1 10.103 142.782 .053b
Residual .071 1 .071
Total 10.174 2
a. Dependent Variable: Meaninflationrateofdevelopingnations
b. Predictors: (Constant), AverageGDPofdevelopingnations
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) -4.529 .915 -4.951 .127
AverageGDPofdevelopingna
tions 6.424E-012 .000 .997 11.949 .053
a. Dependent Variable: Meaninflationrateofdevelopingnations
Interpretation
The value of correlation is 0.997. In addition to this the value of beta that is 6.424E-012
states that change in GDP has impact on inflation in case developing nation. The value of
significance is 0.053. This is above 0.05. Thus here null hypothesis will be accepted and
alternative would be rejected.
Interest rate before crisis developing nations
Regression
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 AverageGDPofdevelopingnationsb . Enter
a. Dependent Variable: Interestratemeanvalueindevelopingnations
b. All requested variables entered.
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .881a .777 .554 .67232
29

a. Predictors: (Constant), AverageGDPofdevelopingnations
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression 1.573 1 1.573 3.481 .313b
Residual .452 1 .452
Total 2.025 2
a. Dependent Variable: Interestratemeanvalueindevelopingnations
b. Predictors: (Constant), AverageGDPofdevelopingnations
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 6.401 2.312 2.768 .221
AverageGDPofdevelopingna
tions 2.535E-012 .000 .881 1.866 .313
a. Dependent Variable: Interestratemeanvalueindevelopingnations
Interpretation
The value of correlation is 0.881. In addition to this the value of beta that is 2.535E-012
states that change in GDP has impact on inflation in case developing nation. The value of
significance is 0.313. This is above 0.05. Thus here null hypothesis will be accepted and
alternative would be rejected.
After crisis developing nations inflation rate
Regression
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 GDPDPNb . Enter
a. Dependent Variable: InflationDPN
b. All requested variables entered.
30

Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .572a .327 -.347 .43991
a. Predictors: (Constant), GDPDPN
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression .094 1 .094 .485 .613b
Residual .194 1 .194
Total .287 2
a. Dependent Variable: InflationDPN
b. Predictors: (Constant), GDPDPN
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1 (Constant) 4.781 2.005 2.385 .253
GDPDPN 5.978E-013 .000 .572 .697 .613
a. Dependent Variable: InflationDPN
Interpretation
R and R square values is 0.572 and 32% and level of significance is 0.613. This reflects
that there is no significance difference between independent and dependent variable.
After crisis developing nations interest rate
Regression
Variables Entered/Removeda
Model Variables Entered Variables Removed Method
1 GDPDPNb . Enter
a. Dependent Variable: InterestDPN
b. All requested variables entered.
31

Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .998a .995 .990 .12224
a. Predictors: (Constant), GDPDPN
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression 3.119 1 3.119 208.732 .044b
Residual .015 1 .015
Total 3.134 2
a. Dependent Variable: InterestDPN
b. Predictors: (Constant), GDPDPN
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
1 (Constant) 17.366 .557 31.174 .020
GDPDPN -3.445E-012 .000 -.998 -14.448 .044
a. Dependent Variable: InterestDPN
Interpretation
Level of significance is 0.04<0.05 and this reflect that there is significant mean difference
between interest rates and GDP of the developing nations. This means that with slight change in
GDP big variation comes in the interest rate.
32

CHAPTER- 5 RECOMMENDATION AND CONCLUSION
5.1 Conclusion
The present research has been conducted with the aim of making an analysis on global
financial crisis and its impact on the core and periphery countries. In this aim, many findings
have been discussed which helps in understanding the impact of GDP, inflation and interest rates
on the economy of both types of nations. As per the report, it has been found that two set of
economies which use to prevail in the core and periphery countries have a dependency. It is quite
apparent that the crisis occurred had a major impact on the periphery countries like China, South
Africa, and India. The economies of these counties are largely dependent on the core countries.
The conditions that are set by these core countries shape the economies of periphery nations.
Because of this, it has been recommended that these countries should have a control on the
foreign dependency. Besides this, from the analysis, it has been discovered that the GDP and
inflation rates are highly correlated. If there is a change in the GDP rates then there is a larger
possibility of rising changes in the inflation rates. Thus, it shows that both of these factors are
dependable variables. While on other hand, it is found that the interest rate of a country does not
have a major impact from GDP and inflation thus, it is an independent variable.
5.2 Recommendation
 It is recommended to the government or political authorities of peripheral countries to lay
emphasis on developing highly competent or backup plan. Moreover, situation of crisis
closely hampers the living standard of people, per capita income, GDP level etc. Hence,
government authorities require making continuous monitoring of fiscal and monetary
policies on the basis of market trends. Hence, by doing this peripheral countries can face
or deal with the situation of crisis more effectively and efficiently.
 Along with this, there is a requirement to develop a new set of international regulation for
banking which in turn helps in avoiding the discrepancies to a great extent. Thus, to
reduce the impact of undesirable situations such as crisis business unit should place
emphasis on strengthening the financial system. This in turn helps them in recover the
losses within the fewer time frames.
33

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