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Analysis of "Dutch Disease Effects" on Asian Economies

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  • Taguchi, Hiroyuki

Abstract

This chapter addresses the issue of the Dutch Disease in relationship with capital inflows through exporting natural resources, accepting foreign aids and emigrant remittances. The analysis focuses on Asian economies that are expected to sustain their growth, and adopts a vector auto-regression model with Granger causality and impulse response tests. The main finding are as follows. First, from the perspective of natural resource abundance in Asian economies, the Dutch Disease was identified for 1980-1995, but not for 1995-2014, probably because of their institutional improvements. Second, in the economies of Cambodia, Lao PDR, Myanmar and Vietnam, their accepted foreign aids have not caused the Ditch Disease and have rather promoted their economic growth, due to their aid contributions to infrastructure development. Third, regarding the Ditch Disease effects of emigrant remittances, the disease was verified in Nepal but not in Bangladesh, due to their different demand structures and policy efforts.

Suggested Citation

  • Taguchi, Hiroyuki, 2016. "Analysis of "Dutch Disease Effects" on Asian Economies," MPRA Paper 78075, University Library of Munich, Germany, revised 14 Mar 2017.
    • Handle: RePEc:pra:mprapa:78075
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    References listed on IDEAS

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    1. Kareem Ismail, 2010. "The Structural Manifestation of the ‘Dutch Disease’: The Case of Oil Exporting Countries," IMF Working Papers 2010/103, International Monetary Fund.
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    6. Yves Bourdet & Hans Falck, 2006. "Emigrants' remittances and Dutch Disease in Cape Verde," International Economic Journal, Taylor & Francis Journals, vol. 20(3), pages 267-284.
    7. Acosta, Pablo A. & Lartey, Emmanuel K.K. & Mandelman, Federico S., 2009. "Remittances and the Dutch disease," Journal of International Economics, Elsevier, vol. 79(1), pages 102-116, September.
    8. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    9. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
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    More about this item

    Keywords

    Dutch Disease; Asian Economies; Capital Inflows; Natural Resources; Foreign Aids; Emigrant Remittances; and Vector Auto-regression (VAR);
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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