Do Remittances from Emigrants Cause “Dutch Disease” in Nepal and Bangladesh?

Using a vector auto-regression estimator, this research investigates the Dutch Disease effects of international migrant remittances in Nepal and Bangladesh. The reason for focusing on two economies is because the disparities in their economic performances may reveal what mechanisms cause received remittances to cause or not cause the Dutch Disease. According to the causes and outcomes of the study, the Dutch Disease exists in Nepal but not in Bangladesh. dynamic remittances-to-manufacturing-services ratio responses We hypothesise that the discrepancies in the consequences of the Dutch Disease are due to differences in demand structures and governmental efforts for industrial development in both economies. The strategic conclusion of the research findings is the importance of improving institutional quality to promote suitable industrial strategies in remittance-dependent countries to avoid the Dutch Disease.

Author (S) Details

Hiroyuki Taguchi
Department of Japanese and Asian Studies, Saitama University, 255 Shimo-Okubo, Sakura-ku, Saitama, 338-8570, Japan.

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