The main factors affecting Taiwan’s economic growth rate via dynamic grey relational analysis

Abstract

Ever since the grey system theory was proposed about 40 years ago, its characteristics such as small samples, few data, and uncertainty have been used for study in the literature with increasingly wider scope. Recent studies on grey relation analysis have included static data analyses, and most of them have adopted initial values with only a relational order. Under the same study conditions, if different data preprocessing methods are used, then the relational order will be ranked differently. This study took Taiwan as the object to explore seven economic indices (birth rate (%), Taiwan’s total population (thousand people), unemployment rate (%), income per capita (USD), weighted average interest rate on deposits (%), Consumer Price Index (CPI), and national income (NI)) and how they affect the economic growth rate. The traditional static grey relational analysis treated the collected data with taking consideration of time effect which is irrational under some circumstance. An innovative dynamic grey relational analysis was carried out by shifting the raw data due to the time leading or lagging effect which is a mean to improve the capability of traditional grey relational analysis. The differences in analyses between static grey relational analysis and dynamic grey relational analysis via different data preprocessing methods were further discussed, finding that different data preprocessing methods generated a new set of relational orders through the latter. Finally, the prosperity index was used to identify the effects of all factors on economic growth (leading, synchronization, and lagging indices).