Remittances, Export Performance, and Policy Frameworks in a Developing Economy

Countering the Dutch Disease Hypothesis in Nepal

Authors

DOI:

https://doi.org/10.32674/6ysx4t52

Keywords:

ARDL bounds testing, cointegration, Dutch disease, error-correction model, real effective exchange rate

Abstract

This study purpose to test whether larger remittance inflow supports or weakens Nepal’s export competitiveness. Annual data from 1994-2024 were used in this study, applying the export-centric ARDL bounds model with ECM and full diagnostics, modelling aggregate exports against remittance, GDP, import, and CPI. The data series are mixed I (0)/ I (1), cointegration is confirmed, and the error-correction term is found to be strong, indicating rapid adjustments. The result shows remittances have a positive but statistically insignificant effect on exports in the short and long run, providing macro-level insight into Dutch-Disease type crowding out. Export moves together with GDP and depend on imported intermediates. Remittance Granger causes imports but not exports. Stability, normality, and specification tests are stable. Thus, it concludes that Nepal’s challenge is not remittance-induced harm to tradables, but rather its failure to convert household savings into exportable capacity. 

Author Biographies

  • Toya Narayan Parajuli, Lumbini Banijya Campus, Tribhuvan University, Nepal

    Toya Narayan Parajuli is an MBA in Banking and Finance scholar at Lumbini Banijya Campus, Tribhuvan University. He holds a Bachelor of Business Administration in Finance and Accounting from the same institution. His research focuses on the nexus between remittances and exports.

  • Prashanna Neupane, Lumbini Banijya Campus, Tribhuvan University, Nepal

    Prashanna Neupane is an MBA in Banking and Finance scholar at Lumbini Banijya Campus, Tribhuvan University. He holds a Bachelor’s degree in Hotel Management from the Nepal Academy of Tourism and Hotel Management (NATHM), Tribhuvan University. His research interests include sustainable tourism, the hospitality sector, economic policy, and startup development.

     

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Published

2025-12-31

Issue

Vol. 4 No. 2 (2025): Interdisciplinary Journal of Innovation in Nepalese Academia

Section

Research Articles

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Copyright (c) 2025 Interdisciplinary Journal of Innovation in Nepalese Academia

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How to Cite

Remittances, Export Performance, and Policy Frameworks in a Developing Economy: Countering the Dutch Disease Hypothesis in Nepal. (2025). Journal of Innovation in Academia , 4(2), 159-184. https://doi.org/10.32674/6ysx4t52