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Emigrant’s remittances, Dutch Disease and capital accumulation in Mekong countries

Hiroyuki Taguchi and Ni Lar

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the sectoral and intertemporal impacts of international emigrant remittances by using a vector auto-regression (VAR) estimation focusing on Cambodia, Lao PDR, Myanmar and Vietnam (CLMV countries). The reason for targeting the CLMV countries is that they have still depended largely on remittance-earnings from their emigrant workers in their economies, and that the macroeconomic impacts of received remittances would be critical for their sustainable growth. The empirical study identified the decline in manufacturing-service ratio (the Dutch Disease effect) as a sectoral effect of remittances, and also the decline in investment-consumption ratio (the deteriorated capital accumulation effect) as their intertemporal effect, judging from the causalities and dynamic responses from remittances to both ratio in the VAR estimation outcomes. The strategic implication is that the CLMV countries should establish a framework to mobilize their remittance-earnings for more productive use.

Keywords: Emigrant’s remittances; Dutch Disease; Capital accumulation; Vector auto-regression estimation; CLMV (search for similar items in EconPapers)
JEL-codes: F22 F66 O53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-sea
Date: 2017-08-04
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