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Analysis of "Dutch Disease Effects" on Asian Economies

Taguchi, Hiroyuki (2016): Analysis of "Dutch Disease Effects" on Asian Economies. Forthcoming in: “Macroeconomics and Microeconomics” by IN TECH (July 2017)

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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.

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