Application of Linear Regression on GDP and International Foreign Exchange Earnings

Abstract

GDP is the most significant measure for assessing a nation’s or region’s economic standing and level of development, which is also the core indicator of national accounting. The rapidly developing tourism industry contributes significantly to GDP, and as China’s international status continues to improve, foreign exchange earnings from international tourism also continue to rise. This paper uses The National Bureau of Statistics’ data release to measure the four important variables associated with GDP and the three variables associated with international tourism foreign exchange earnings. By constructing a multiple linear regression model, eliminating multiple covariance and using software correction, it is found that there is a positive correlation between GDP and total social consumer goods and net exports, and a positive correlation between foreign exchange earnings from international tourism and the number of international routes of civil aviation. Relevant suggestions are also put forward, such as enhancing the country’s economic strength and globalization, building a strong national brand and promoting consumer upgrades by expanding trade with foreign countries, thus improving product quality and meeting consumer demand for a high quality of life. This will not only help to attract more foreign tourists, but will also contribute to sustained GDP growth.