Emigrant’s remittances, Dutch Disease and capital accumulation: The case of Mekong countries

Hiroyuki TAGUCHI, Ni LAR

Abstract


Abstract. This paper examines the sectoral and intertemporal impacts of international emigrant remittances by using a vector auto-regression (VAR) estimation focusing on Cambodia, Lao PDR, Myanmar and Vietnam (CLMV countries). The reason for targeting the CLMV countries is that they have still depended largely on remittance-earnings from their emigrant workers in their economies, and that the macroeconomic impacts of received remittances would be critical for their sustainable growth. The empirical study identified the decline in manufacturing-service ratio (the Dutch Disease effect) as a sectoral effect of remittances, and also the decline in investment-consumption ratio (the deteriorated capital accumulation effect) as their intertemporal effect, judging from the causalities and dynamic responses from remittances to both ratio in the VAR estimation outcomes. The strategic implication is that the CLMV countries should establish a framework to mobilize their remittance-earnings for more productive use.

Keywords. Emigrant’s remittances, Dutch Disease, Capital accumulation, Vector auto-regression estimation.

JEL. F22, F66, O53.

Keywords


Emigrant’s remittances; Dutch Disease; Capital accumulation; Vector auto-regression estimation.

Full Text:


References


Acosta, P.A., Calderon, C., Fajnzylber, P., & Lopez, H. (2008). What is the impact of international migrant remittances on poverty and inequality in Latin America? World Development, 36, 89-114. doi. 10.1016/j.worlddev.2007.02.016

Acosta, P.A., Lartey, E.K.K., & Mandelman, F.S. (2009). Remittances and the Dutch Disease. Journal of International Economics, 79, 102-116. doi. 10.1016/j.jinteco.2009.06.007

Aggarwal, R., Demirguc-Kunt, A., & Peria, M. (2006). Do workers’ remittances promote financial development? World Bank Policy Research Working Paper, No.3957. [Retrieved from].

Adams, R., & Cuecuecha, A. (2010). The economic impact of international remittances on poverty and household consumption and investment in Indonesia. World Bank Policy Research Working Paper, No.5433. doi. 10.1596/1813-9450-5433

Adams, R., & Page, J. (2005). Do international migration and remittances reduce poverty in developing countries? World Development, 33(10), 1645-1669. doi. 10.1016/j.worlddev.2005.05.004

Barham, B., & Boucher, S. (1998). Migration, remittances and inequality: estimating the net effects of migration on income distribution. Journal of Development Economics, 55(3), 307–331. doi. 10.1016/S0304-3878(98)90038-4

Bourdet, Y., & Falck, H. (2006). Emigrants’ remittances and dutch disease in cape verde. International Economic Journal, 20(3), 267-284. doi. 10.1080/10168730600879323

Carling, J. (2004). Policy options for increasing the benefits of remittances. Paper presented at the Ninth International Metropolis Conference, Geneva, September 27-October 1. [Retrieved from].

Chowdhury, M. (2011). Remittances flow and financial development in Bangladesh. Economic Modelling, 28(6), 2600-2608. doi. 10.1016/j.econmod.2011.07.013

Corden, W.M., & Neary, J.P. (1982). Booming sector and de-industrialization in a small open economy. Economic Journal, 92(368), 825-848. doi. 10.2307/2232670

Cox-Edwards, A., & Ureta, M. (2003). International migration, remittances and schooling: Evidence from El Salvador. Journal of Development Economics, 72(2), 429-461. doi. 10.1016/S0304-3878(03)00115-9

Fayad, G. (2011). Remittances: Dutch disease or export-led growth? OxCarre (Oxford Centre for the Analysis of Resource Rich Economies) Research Paper, No57. [Retrieved from].

Frankel, J. (2010). The natural resource curse: A survey. NBER Working Paper Series, No.15836. doi. 10.3386/w15836

Gill, I., & Kharas, H. (2007). An East Asian Renaissance. IBRD and World Bank. [Retrieved from].

Giuliano, P., & Ruiz-Arranz, M. (2009). Remittances, financial development and growth. Journal of Development Economics, 90(1), 144–152. doi. 10.1016/j.jdeveco.2008.10.005

Gorlich, D., Omar, M., & Christoph, T. (2007). Explaining labour market inactivity in migrant-sending families: Housework, hammock, or higher education? Kiel Working Paper, No.1391. [Retrieved from].

Ilzetzki, E., Reinhart, C.M. & Rogoff, K.S. (2011). The country chronologies and background material to exchange rate arrangements into the 21st century: Will the Anchor Currency Hold? [Retrieved from].

Lartey, E.K.K., Mandelman, F.S. & Acosta, P.A. (2012). Remittances, exchange rate regimes and the ditch disease: A panel data analysis. Review of International Economics, 20(2), 377-395. doi. 10.1111/j.1467-9396.2012.01028.x

Lokshin, M., Bontch-Osmolovski, M., & Glinskaya, E. (2010). Work-related migration and poverty reduction in Nepal. Review of Development Economics, 14(2), 323–332. doi. 10.1111/j.1467-9361.2010.00555.x

Pant, B. (2008). Mobilizing remittances for productive use: A policy-oriented approach. NRB (Nepal Rastra Bank) Working Paper, No.4. [Retrieved from].

Taylor, J.E., Mora, J. Adams, R.Jr. & Lopez-Feldman, A. (2005). Remittances, inequality and poverty: evidence from rural Mexico. Working Paper (Department of Agricultural Economics, University of California), 05–003. [Retrieved from].

Woodruff, C., & Zenteno, R. (2001). Remittances and microenterprises in Mexico. Working Paper (Graduate School of International Relations and Pacific Studies, University of California), No.43.

World Bank, (2016). Migration and Remittances: Recent Developments and Outlook, World Bank.

Yang, D. (2005). International migration, human capital, and entrepreneurship: Evidence from Philippine migrants’ exchange rate shocks. World Bank Policy Research Working Paper, No.3578. [Retrieved from].




DOI: http://dx.doi.org/10.1453/jeb.v4i4.1515

Refbacks

  • There are currently no refbacks.


.......................................................................................................................................................................................................................................................................................................................................

Journal of Economics Bibliography - J. Econ. Bib.  - JEB - www.kspjournals.org

ISSN: 2149-2387. Editor : editor-jeb@kspjournals.org   Secretarial: secretarial@kspjournals.org   Istanbul - Turkey.

Copyright © KSP Journals