GDP per capita and trade relationship There's a lot of literature describing the relationship between growth and trade, but I'm not sure what conclusions I can draw from GDP per capita (specifically) and trade in one particular year for multiple countries. The graph is a regression I ran, so the red line demonstrates a positive relationship between the two variables in that year. But I'm also confused because the R squared value is very low, indicating a weak relationship. Is this because I have included too many countries in the test or because of the many other factors playing a part? Apologies as this question is probably quite stupid, but I'm very confused.



The task: "The United Kingdom government has asked you to write a report on the relationship between gross domestic product (GDP) per capita and trade openness. In particular, they would like to know whether the sum of exports and imports as a percentage of GDP had a positive effect on GDP per capita in 2015. To allow you to do this, they make available data on GDP per capita, exports of goods and services and imports of goods and services. GDP per capita is measured in constant 2010 United States dollars and exports and imports are expressed as a percentage of GDP."
The reason that relationship weak is that there is a whole lot more influencing GDP than just trade. Not included in this analysis are things like commodity prices, types of exports, quality of institutions in a country, population. Countless others.

If you wanted to test the hypothesis that countries with higher levels of trade tend to be larger, you probably have. With such a simple analysis, it's probably hard to get much more than this.