Content

Part

Description

Page

(a)

Background

1-3

(b)

Results

4-12

(c)

Conclusion

13

Part(a) Background

Countries

Iceland

Kuwait

Lesotho

Sample Size

24

24

23

Mean

37.92711

54.7908

39.70466

Median

34.21485

52.60396

44.61505

Variance

81.48525

162.8687

225.7594

Standard
Deviation

9.026918

12.762

15.02529

Coefficient Of
Variation
Coefficient Of
Skewness

23.8007

23.29223

37.84264

1.23373

0.514066

-0.98043

From the table above, we can see that the countries with highest average exports of
goods and services (% of GDP) to the lowest average exports of goods and services (% of
GDP) are Kuwait, Lesotho and Iceland. Iceland and Kuwait have quite similar trend since
year 1991 which is positive. However, Lesotho has a trend that different from the other two

countries because it shows a positive trend from year 1990 to year 2002, then its trend turns
from positive to negative from year 2002 to year 2012. This is due to the general election for
Lesotho in year 2002, which is the first time, opposition political parties won significant
numbers of seats. The change in the political environment of Lesotho have affect the
economy policy of the country and thus reduce the exports of goods and services in % of
GDP.
Besides that, Kuwait shows a significant decrease in exports of goods and
services (% of GDP) from year 1990 to year 1991, and then it increases
significantly in year 1992 and shows a positive trend from year 1992 onwards.
The cause of this situation is because Kuwaits exports of goods and services is
mainly based petroleum. But, in August 1990, Iraqi forces invaded and annexed Kuwait. This
has greatly decrease the export of petroleum of Kuwait. On 26 February 1991, the coalition
led by the United States succeeded in driving out the Iraqi forces. Kuwait is no longer under
the control of Iraq and the export of goods and services(% of GDP), especially petroleum is
back to positive trend since then.
Iceland experienced a major increase in exports of goods and services (% of GDP)
from year 2007 to year 2009 due to the huge decrease in the countrys exchange rate, caused
by a rise in interest rates by the Icelandic government to 18% on 28 October 2008 , a move
which was forced in part by the terms of acquiring a loan from International Monetary Fund
(IMF). After the rate hike, trading on the Icelandic Krna finally resumed on the open market,
with valuation at around 250 ISK per Euro, a significant drop from the 1:150 exchange ratio
of the week before.
In 2007, Iceland was the seventh most productive country in the world per capita
(US$54,858), and the fifth most productive by GDP at purchasing power parity ($40,112).
Historically, Iceland's economy depended heavily on fishing, which still provides 40% of
export earnings and employs 7% of the work force. Iceland's economy has been diversifying
into manufacturing and service industries in the last decade, including software production,
biotechnology, and finance; industry accounts for around a quarter of economic activity,
while services comprise close to 70%.Despite the decision to resume commercial whale
hunting in 2006, the tourism sector is expanding, especially in ecotourism and whalewatching. On average, Iceland receives around 1.1 million visitors annually, which is more

than three times the native population. Iceland's agriculture industry, accounting for 5.4% of
GDP, consists mainly of potatoes, green vegetables in greenhouses, mutton and dairy
products.
Kuwait has a petroleum-based economy, petroleum and fertilizers are the main export
products. Petroleum accounts for nearly half of GDP and 94% of export revenues and
government income. Kuwait was the pioneer in the Middle East in diversifying its earnings
away from oil exports. In the past five years, there has been a significant rise in
entrepreneurship and small business start-ups in Kuwait. The informal sector is also on the
rise, mainly due to the popularity of Instagram businesses. Many Kuwaiti entrepreneurs are
using the Instagram-based business model. Since the July 2013 election of a less combative
parliament, there has been significant progress in the development of key projects. Kuwait
has become home to many fast-growing projects mostly in the Gulf region, despite falling oil
prices.
The economy of Lesotho is based on agriculture, livestock, manufacturing and
mining, and depends heavily on inflows of workers remittances and receipts from the
Southern African Customs Union. Lesotho has taken advantage of the African Growth and
Opportunity Act (AGOA) to become the largest exporter of garments to the US from subSaharan Africa.. In 2008, it exported goods worth 487 million dollars mainly to the U.S.A.
Water and diamonds are Lesotho's significant natural resources. A 21-year, multi-billiondollar Lesotho Highlands Water Project is launched to capture, store, and transfer water from
the Orange River system to South Africa's Free State and greater Johannesburg area.
Completion of the first phase of the project has made Lesotho almost completely selfsufficient in the production of electricity and generated approximately $70 million in 2010
from the sale of electricity and water to South Africa. Diamonds are produced at the Letseng,
Mothae, Liqhobong and Kao mines, which combined are estimated to produce 240,000 carats
of diamonds in 2014, worth $300 million. The Letseng mine is estimated to produce
diamonds with an average value of $2172/carat, making it the worlds richest mine on an
average price per-carat basis. Lesotho has progressed in moving from a predominantly
subsistence-oriented economy to a lower middle income economy exporting natural resources
and manufacturing goods. The exporting sectors have brought higher and more secure
incomes to a significant portion of the population.

Part b (i) ANOVA Hypothesis Testing : Single Factor

SUMMARY
Groups

Count

Sum

Average

Variance

Iceland

24

910.2506755

37.92711148

81.48524589

Kuwait

24

1314.979115

54.79079644

162.8686574

Lesotho

23

913.2071081

39.70465687

225.7594098

SS

df

MS

P-value

F crit

4101.12413

2050.562064

13.17089244

1.4634E-05

3.131672

10586.8468

68

155.6889234

14687.9709

70

ANOVA
Source of
Variation
Between
Groups
Within Groups
Total

Step 1
H0 : I = K = L
H1 : At least one of i is different, where i = I , K , L .
Step 2
= 0.05
Step 3
Decision Rule : Reject H0 if F test is greater than FU . Otherwise, do not reject H0 .
Step 4
Critical Value : F,k-1,n-k = F0.05, 2, 68
= 3.131672
Step 5
Test

MSA
MSW
2050.562064
155.6889234

Statistic : F test =
=

13.17089244

Step 6
Decision Making = Reject H0 since F test = 13.17089244 is greater than F,k-1,n-k = 3.131672.
Step 7
Conclusion : There is sufficient evidence to conclude that at least one of the mean, i is not
equal at = 0.05 where i = I , K , L .
P-Value Approach
Step 1
H0 : I = K = L
H1 : At least one of i is different, where i = I , K , L .
Step 2
= 0.05
Step 3
Decision Rule : Reject H0 if P-Value < ( =0.05 ) . Otherwise, do not reject H0 .
Step 4
Test

MSA
Statistic :
MSW
2050.562064
=
155.6889234

F=

13.17089244

Step 5
P-

Ps ( 1- Ps )
n

= Z0.05

Value = Z

([0.05(1-0.05)]/71)

= 0.0000146340327421049
= 1.46340327421049x10-5

= 1.4634E-05

Step 6
Decision Making = Reject H0 since P-Value = 1.4634E-05 (1.46340327421049x10-5) < =
0.05. Otherwise, do not reject H0.
Step 7
Conclusion : There is sufficient evidence to conclude that at least one of the mean, i is not
equal at = 0.05 where i = I , K , L .

Part b (ii) Two independent samples mean t-test with unequal variances
1. Iceland & Kuwait
t-Test: Two-Sample Assuming Unequal Variances
Iceland

Kuwait

Mean

32.92711

54.7908

Variance

81.48525

162.8687

Observations

24

24

Hypothesized Mean
Difference

df

41
-5.28504

t Stat
P(T<=t) one-tail

0.00000223

t Critical one-tail

1.682878

P(T<=t) two-tail

0.00000044
6

t Critical two-tail

2.019541

H0 :

1=2 , where 1=Iceland and 2=Kuwait

H1 :

1 2 (This is a two-tailed test)

Level of significance: = 0.05

Critical Value Approach:
DR: Reject

H 0 if test statistic is higher than upper critical value or lower then lower

critical value. Otherwise, do not reject

H0.

CV: 2.019541
TS: t = -5.28504
DM: Reject
-2.019541

H 0 since the test statistic, =5.28504 is lower than lower critical value,

C: There is sufficient evidence to conclude that the mean of export of goods and services in
Iceland is not equal to the mean of export of goods and services in Kuwait at significance
level, = 0.05.
P-Value Approach:
DR: Reject
reject

H 0 if P-value lower than the level of significance, = 0.05. Otherwise, do not

H0 .

06
P-Value: 4.46 10

DM: Reject

H 0 since the P-value, 4.46 1006 is lower than the level of significance,

= 0.05.
C: There is sufficient evidence to conclude that the mean of export of goods and services in
Iceland is not equal to the mean of export of goods and services in Kuwait at significance
level, = 0.05.
Confidence Interval Approach:
DR: Reject

H 0 if the hypothesized mean difference of zero does not fall within the 95%

confidence interval. Otherwise, do not reject

H0 .

CV: 2.0195
Confidence Interval of 95%:

[ ( )]

t = ( X 1 X 2) t v

S21 S22
+
n1 n2

= (32.92711-54.7908) 2.0195 (

81.48525 162.8687
+
)
24
24

= -21.8637 2.0195 (10.1814)

= (-1.3027, -42.4247)
= -1.3027 1 - 2 -42.4247
DM: Reject

H 0 since the hypothesized mean difference of zero does not fall within the

95% confidence interval, from -1.3027 to -42.4247.

C: There is sufficient evidence to conclude that the mean of export of goods and services in
Iceland is not equal to the mean of export of goods and services in Kuwait at significance
level, = 0.05.

2. Iceland and Lesotho

t-Test: Two-Sample Assuming Unequal Variances
Iceland

Lesotho

Mean

37.9711

39.70466

Variance

81.48525

225.7594

Observations

24

23

Hypothesized Mean
Difference

df

36

t Stat

-0.48905

P(T<=t) one-tail

0.313886

t Critical one-tail

1.688298

P(T<=t) two-tail

0.627771

t Critical two-tail

2.028094

H 0 : 1 = 2 , where 1 = Iceland and 2 = Lesotho

H 1 : 1 2

(This is a two tailed test)

Level of significance: = 0.05

Critical Value Approach
DR: Reject

H 0 if test statistic is higher than upper critical value or lower than lower

critical value. Otherwise, do not reject

CV: 2.0281

H0.

TS: t = -0.48905
H 0 since the test statistic, -0.48905 is lower than the lower critical values,

DM: Reject
-2.0281.

C: There is sufficient evidence to conclude that the mean of export of Goods and services in
Iceland is not equal to the mean of export of goods and services in Lesotho at significance
level, = 0.05.

P-Value Approach
H 0 if P-value is lower than the level of significance, = 0.05. Otherwise, do

DR: Reject
not reject

H0.

P-value: 0.627771
DM: Do not reject

H 0 since the P-value, 0.627771 is higher than significance level, =

0.05.
C: There is sufficient evidence to conclude that the mean of export of goods and services in
Iceland is equal to the mean of export of goods and services in Lesotho at significance level,
= 0.05.
Confidence Interval Approach
DR: Reject H 0 if the hypothesized mean difference of zero does not fall within the 95%
confidence interval. Otherwise, do not reject

H0.

CV: 2.0281
Confidence Interval of 95%:

[ ( )]

t = ( X 1 X 2) t v

S21 S22
+
n1 n2

= (37.9711 39.70466) 2.0281 (

= -1.73356 2.0281 (13.21084)
= (25.0594, -28.52656)

81.48525 225.7594
+
)
24
23

= -28.52656 1 - 2 25.0594
DM: Reject

H 0 since the hypothesized mean difference of zero does not fall within the

95% confidence interval, from =28.52656 to 25.0594.

C: There is sufficient evidence to conclude that the mean of exporting of goods and services
in Iceland is not equal to the mean of exporting of goods and services in Lesotho at
significance level, = 0.05.

3. Kuwait and Lesotho

t-Test: Two-Sample Assuming Unequal
Variances

Kuwait

Lesoth
o

Mean

54.790
8

39.704
6

Variance

162.86
87

225.75
84

Observations

24

23

Hypothesized Mean
Difference

df

43

t Stat

3.7025

P(T<=t) one-tail

0.0003
02

t Critical one-tail

1.6810
7

P(T<=t) two-tail

0.0006

04
2.0166
9

t Critical two-tail

H 0 : 1 =

2 , where 1 = Kuwait and 2 = Lesotho.

H 1 : 1 2

(This is a two tailed test)

Level of significance: = 0.05

Critical Value Approach
H 0 if test statistic is higher than upper critical value or lower than lower

DR: Reject

critical value. Otherwise, do not reject

H0.

CV: 2.0167
TS: t = 3.7025
DM: Reject

H 0 since the test statistic, 3.7025 is higher than the upper critical value,

2.0167.
C: There is sufficient evidence to conclude that the mean of exporting of goods and services
in Kuwait is not equal to the mean of exporting of goods and services in Lesotho at
significance level, = 0.05.

P-Value Approach
DR: Reject
not reject

H 0 if P-value is lower than the level of significance, = 0.05. Otherwise, do

H0 .

P-value: 0.000604
DM: Reject

H 0 since the P-value, 0.000604

level, = 0.05, reject

is lower than the level of significance

H0 .

C: There is sufficient evidence to conclude that the mean of exporting of goods and services
in Kuwait is not equal to the mean of exporting of goods and services in Lesotho at
significance level, = 0.05.

Confidence Interval Approach

DR: Reject

H 0 if the hypothesized mean difference of zero does not fall within the 95%

confidence interval. Otherwise, do not reject

H0 .

CV: 2.0167
Confidence Interval of 95%:

t=

[ ( )]

( X 1 X 2) t v

S21 S22
+
n1 n2

= (54.7908 39.7046) 2.0167 (

162.8687 225.7584 .
+
)
24
23

= 15.0862 2.0167 (16.6081)

= (48.5672, -18.3948)
= -18.3948 1 - 2 48.5672
DM: Reject

H 0 since the hypothesized mean difference of zero does not fall within the

95% confidence interval, from -18.3948 to 48.5672.

C: There is sufficient evidence to conclude that the mean of exporting of goods and services
in Kuwait is not equal to the mean of exporting of goods and services in Lesotho at
significance level, = 0.05.

Part(c) Conclusion:
Among the three countries which are Iceland, Kuwait and Lesotho, Iceland has the
lowest average exports of goods and services (% of GDP) whereas Kuwait is the highest
average exports of goods and services (% of GDP). Iceland and Kuwait had similar trends in
terms of positive growth of exports of goods and services whereas Lesotho differ from both

countries as the trend dipped sharply in the year of 2002 due to the change in political
environments which has affected the rates of exports of goods and services.
According to the ANOVA test performed based on the findings, the critical value and
p-value approach which both concluded in rejecting the null hypothesis formulated. The Ftest statistic which is 13.17089244 is greater than the F-upper critical value which is
3.131672. With this we reject the null hypothesis in which it claims that the three countries,
Iceland, Kuwait and Lesotho has the same mean. With the findings from the p-value approach
and also the critical value approach, we have sufficient evidence to conclude that at least one
mean, , is different at significance level, , of 0.05.
There are statistical differences for all three countries, Iceland, Kuwait and Lesotho.
For the first test, Iceland and Kuwait, we reject the null hypothesis as the test statistic value (5.28504) is lower than the lower critical value (2.019541) which shows that the mean of
exports of goods and services in Iceland is different with Kuwait at a significance level of =
0.05. As for the second test, Iceland and Lesotho, we reject the null hypothesis as the test
statistic value (0.48905) is lower than the lower critical value (2.0281), this shows that the
mean of exports of goods and services in Iceland is different with Lesotho at a significance
level of = 0.05. And as for the last test, Kuwait and Lesotho, we reject the null hypothesis
as the test statistic (3.7025) is higher than the critical value (2.1067) which shows that the
mean of exports of goods and services in Kuwait and Lesotho is different at a significance
level of = 0.05.
Overall there is sufficient evidence to conclude that the average exports of goods and
services (% of GDP) for Iceland, Kuwait and Lesotho are different with one another at =
0.05 or at the 95% of confidence interval.