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Analysis of 'Dutch Disease Effects' on Asian Economies

In: Emerging Issues in Economics and Development

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  • Hiroyuki Taguchi

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 findings are as follows. Firstly, 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. Secondly, in the economies of Cambodia, Lao PDR, Myanmar and Vietnam, their accepted foreign aids have not caused the Dutch Disease and have rather promoted their economic growth, due to their aid contributions to infrastructure development. Thirdly, regarding the Dutch 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

  • Hiroyuki Taguchi, 2017. "Analysis of 'Dutch Disease Effects' on Asian Economies," Chapters, in: Musa Jega Ibrahim (ed.), Emerging Issues in Economics and Development, IntechOpen.
    • Handle: RePEc:ito:pchaps:116886
    DOI: 10.5772/intechopen.68852
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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.
    2. Rajan, Raghuram G. & Subramanian, Arvind, 2011. "Aid, Dutch disease, and manufacturing growth," Journal of Development Economics, Elsevier, vol. 94(1), pages 106-118, January.
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    4. 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.
    5. 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.
    6. Torfinn Harding & Anthony J Venables, 2016. "The Implications of Natural Resource Exports for Nonresource Trade," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(2), pages 268-302, June.
    7. Emmanuel K. K. Lartey & Federico S. Mandelman & Pablo A. Acosta, 2012. "Remittances, Exchange Rate Regimes and the Dutch Disease: A Panel Data Analysis," Review of International Economics, Wiley Blackwell, vol. 20(2), pages 377-395, May.
    8. 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.
    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; vector auto-regression (VAR);
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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