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Do Foreign Aid And Remittance Inflows Hurt Competitiveness Of Exports Of Pacific Island Countries? An Empirical Study Of Fiji

Author

Listed:
  • T.K. JAYARAMAN

    (Fiji National University, Fiji Islands)

  • CHEE-KEONG CHOONG

    (Universiti Tunku Abdul Rahman, Malaysia)

  • PRAVINESH CHAND

    (University of the South Pacific, Fiji Islands)

Abstract

Foreign aid and remittance inflows have been playing major roles in the economic growth and development of Pacific island countries (PICs). However, the relationship between these international capital inflows and export competitiveness of PICs has not been adequately studied. It is generally held that such capital transfers tend to hurt exports, a phenomenon known as Dutch disease. The objective of this paper is to examine the validity of the Dutch disease hypothesis in PICs with a case study of Fiji. Employing the bounds testing procedure, this empirical study reveals that inflows of both foreign aid and remittances have been contributing to the appreciation of Fiji¡¯s currency. The study establishes the validity of the Dutch disease hypothesis as far as Fiji is concerned.

Suggested Citation

  • T.K. Jayaraman & Chee-Keong Choong & Pravinesh Chand, 2016. "Do Foreign Aid And Remittance Inflows Hurt Competitiveness Of Exports Of Pacific Island Countries? An Empirical Study Of Fiji," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 41(2), pages 111-125, June.
    • Handle: RePEc:jed:journl:v:41:y:2016:i:2:p:111-125
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    References listed on IDEAS

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    Cited by:

    1. Jeffrey A Edwards & Alfredo A. Romero, 2020. "Volatility, island nations and small states," Economics and Business Letters, Oviedo University Press, vol. 9(3), pages 248-254.

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    More about this item

    Keywords

    Foreign Aids; Remittances; Export Competitiveness; Cointegration; Granger Causality Test;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F35 - International Economics - - International Finance - - - Foreign Aid

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