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Do Foreign Aid and Remittance Inflows Hurt Competitiveness of Exports of Pacific Island Countries? An Empirical Study of Fiji

Jayaraman, T.K. and Choong, C.K. and Chand, Pravinesh (2016) Do Foreign Aid and Remittance Inflows Hurt Competitiveness of Exports of Pacific Island Countries? An Empirical Study of Fiji. Journal of Economic Development , 41 (2). pp. 111-125. ISSN 0254-8372

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    Abstract

    Foreign aid and remittance inflows have been playing major roles in the economic growth and development of Pacific island countries (PICs). However, the relationship between these international capital inflows and export competitiveness of PICs has not been adequately studied. It is generally held that such capital transfers tend to hurt exports, a phenomenon known as Dutch disease. The objective of this paper is to examine the validity of the Dutch disease hypothesis in PICs with a case study of Fiji. Employing the bounds testing procedure, this empirical study reveals that inflows of both foreign aid and remittances have been contributing to the appreciation of Fiji’s currency. The study establishes the validity of the Dutch disease hypothesis as far as Fiji is concerned. Keywords: Foreign aids, remittances, export competitiveness, cointegration, Granger causality test

    Item Type: Journal Article
    Subjects: H Social Sciences > HB Economic Theory
    Divisions: Faculty of Business and Economics (FBE) > School of Economics
    Depositing User: Pravinesh Chand
    Date Deposited: 31 Aug 2016 16:51
    Last Modified: 31 Aug 2016 16:51
    URI: http://repository.usp.ac.fj/id/eprint/9122
    UNSPECIFIED

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