Do international remittances cause Dutch disease?
Dutch disease is a condition whereby a booming export sector along with a concomitant strengthening of the non-tradable sector cause a deterioration in the rest of the tradable sector. Regression analysis finds that Dutch disease due to international remittances appears to afflict the developing countries more than the upper income countries. Developing countries, however, can inoculate their economies with policies that strengthen the domestic economy and facilitate structural change to keep the disease from setting in.
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