Global GDP Drivers of U.S. Venture Capital Index

Abstract

This study examines the relationship between the U.S. Venture Capital Index and the gross domestic product (GDP) growth rates of eight major world economies, including the United States, the United Kingdom, Switzerland, Japan, Germany, France, Canada, and Australia. The analysis involves reducing the dataset down to two explanatory components that best explain the variation in the dataset. Furthermore, an analysis has been performed for determining the robustness of the relationship between the U.S. Venture Capital Index and the extracted components representing the GDP growth rates of major economies. The results obtained using the weighted least squares method establishes that the U.S. Venture Capital Index has a high positive correlation with the two explanatory variables and that more than 70% of the variation is explained by the principal components representing the GDP growth rates.

TOPICS: Private equity, developed, statistical methods, performance measurement