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Emigrant’s remittances, Dutch Disease and capital accumulation: the case of Bangladesh

Listed author(s):
  • Taguchi, Hiroyuki
  • Shammi, Rifah Tamannah

This paper examines varying macroeconomic impacts of international emigrant remittances in Bangladesh since 1976 by using a vector auto-regression (VAR) framework. Bangladesh has recorded better economic performance during last two decades, 1996-2014, compared to earlier two decades, 1976-1995. The time-series analysis therefore uncovers some transition in the remittance impacts composed of the “Dutch Disease” effect and the capital accumulation effect. The empirical results reveal the existence of the Dutch Disease effect for the first period, 1976-1995, but turned to show the positive impact on capital accumulation for the second period, 1996-2014. We speculate that the recent manufacturing-oriented policies together with institutional improvements have contributed to the transformation in the remittance impact towards a positive direction between two periods.

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File URL: https://mpra.ub.uni-muenchen.de/80703/1/MPRA_paper_80703.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 80703.

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Date of creation: Mar 2017
Date of revision: Jun 2017
Handle: RePEc:pra:mprapa:80703
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  1. Adams, Richard Jr. & Page, John, 2005. "Do international migration and remittances reduce poverty in developing countries?," World Development, Elsevier, vol. 33(10), pages 1645-1669, October.
  2. Chakra P. ACHARYA & Roberto LEON-GONZALEZ, 2013. "The Impact of Remittance on Poverty and Inequality: A Micro-Simulation Study for Nepal," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 3(9), pages 1061-1080, September.
  3. Chowdhury, Mamta B., 2011. "Remittances flow and financial development in Bangladesh," Economic Modelling, Elsevier, vol. 28(6), pages 2600-2608.
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  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. Görlich, Dennis & Omar Mahmoud, Toman & Trebesch, Christoph, 2007. "Explaining labour market inactivity in migrant-sending families: Housework, hammock, or higher education?," Kiel Working Papers 1391, Kiel Institute for the World Economy (IfW).
  9. Acosta, Pablo & Calderon, Cesar & Fajnzylber, Pablo & Lopez, Humberto, 2008. "What is the Impact of International Remittances on Poverty and Inequality in Latin America?," World Development, Elsevier, vol. 36(1), pages 89-114, January.
  10. 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.
  11. Alok Bhargava, 1986. "On the Theory of Testing for Unit Roots in Observed Time Series," Review of Economic Studies, Oxford University Press, vol. 53(3), pages 369-384.
  12. 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.
  13. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November.
  14. Debapriya Bhattacharya & Mustafizur Rahman & Ananya Raihan, 2002. "Contribution of the RMG Sector to the Bangladesh Economy," CPD Working Paper 50, Centre for Policy Dialogue (CPD).
  15. Ghada Fayad, 2011. "Remittances: Dutch disease or export-led growth?," OxCarre Working Papers 057, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  16. 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.
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