Munich Personal RePEc Archive

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

Taguchi, Hiroyuki and Shammi, Rifah Tamannah (2017): Emigrant’s remittances, Dutch Disease and capital accumulation: the case of Bangladesh.

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Abstract

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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