Do emigrants' remittances cause Dutch disease? A developing countries case study

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dc.contributor.authorPolat, Burcak
dc.contributor.authorAndres, Antonio Rodriguez
dc.date.accessioned2024-12-24T19:29:52Z
dc.date.available2024-12-24T19:29:52Z
dc.date.issued2019
dc.departmentSiirt Üniversitesi
dc.description.abstractAlthough the positive socio-economic effects of remittances for recipient countries in the short term are unmistakable, inflows of remittances may at the same time exert adverse effects on the trade competitiveness of an economy, by appreciating the real exchange rate. This phenomenon is characterised as an instance of the Dutch disease' - the negative impact of windfall revenue inflows on the competitiveness of other tradable sectors and hence on overall economic growth. While the real effect of workers' remittances on real exchange rates in a recipient economy is still a controversial issue, several studies have analysed evidence for the existence of the Dutch disease' phenomenon in various sets of countries. The main objective of this study is to examine whether remittance flows have had any adverse effect on the international trade competitiveness of a selected group of developing countries during the period from 1995 to 2014. Using a one-step system Generalised Method of Moments specification within a simultaneous equation approach, it shows that remittance flows depreciate the real exchange rate at their levels and that the lagged value of remittances create the Dutch disease for this country group. In addition, we confirm that while trade openness and world real interest rates contribute to a depreciation in real exchange rates, gross domestic product per capita and net Official Development Aid inflows tend to appreciate real exchange rates. A policy implication is that trade liberalisation policies that lower tariff rates on capital imports and new export-oriented incentive programmes should be accompanied by measures designed to prevent appreciation in the real exchange rate: steps in this direction such as recent macroeconomic and prudential capital flow management initiatives are briefly referenced.
dc.description.sponsorshipSGS project [SP2018/151]
dc.description.sponsorshipDr. Rodriguez received financial support for the research and publication of this article from the SGS project no. SP2018/151 entitled 'The role of migration and the knowledge economy in developing and emerging economies, Faculty of Economics, VSB TU Ostrava'.
dc.identifier.doi10.1177/1035304619828560
dc.identifier.endpage76
dc.identifier.issn1035-3046
dc.identifier.issn1838-2673
dc.identifier.issue1
dc.identifier.scopus2-s2.0-85061574544
dc.identifier.scopusqualityQ2
dc.identifier.startpage59
dc.identifier.urihttps://doi.org/10.1177/1035304619828560
dc.identifier.urihttps://hdl.handle.net/20.500.12604/7286
dc.identifier.volume30
dc.identifier.wosWOS:000461570600004
dc.identifier.wosqualityQ1
dc.indekslendigikaynakWeb of Science
dc.indekslendigikaynakScopus
dc.language.isoen
dc.publisherSage Publications Ltd
dc.relation.ispartofEconomic and Labour Relations Review
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanı
dc.rightsinfo:eu-repo/semantics/openAccess
dc.snmzKA_20241222
dc.subjectExchange rate
dc.subjectinternational migration
dc.subjectremittances
dc.titleDo emigrants' remittances cause Dutch disease? A developing countries case study
dc.typeArticle

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