What explains the highly significant negative correlation between stock price
synchronicity and per capita GDP? Per capita GDP is a general measure of
economic development. In this section, we hypothesize that particular economy
characteristics, or dimensions of economic development, might plausibly be
related to stock price synchronicity, and that per capita GDP might serve as
a proxy for these characteristics. Our strategy is to see which development
measures are most correlated with stock price synchronicity, and to ask whether
they render per capita GDP insignificant in multivariate regressions. From this
exercise, we hope to learn what economic linkages might underlie the correlation
between stock price synchronicity and per capita income