This research paper aims to examine the Dutch disease syndrome in the more diversified economies of the Economic and Social Commission of Western Asia (ESCWA).
An econometric model was applied to observe the impact of this syndrome on the different sectors of the economy. A regression analysis examined the relationship between this inflow of capital and lagging sector of these economies. Similarly, Granger‐causality was applied to determine the direction of causality between the variables.
Results indicate that worker remittances, foreign grants, and oil revenues are the main factors behind the Dutch syndrome in the ESCWA region. Channeling remittances through investments, subsidizing output of lagging sectors, and imposing higher import tariffs are recommended to reduce the negative externalities of the Dutch disease.
It is to be noted that the paper has some limitations since data/statistics for the ESCWA region may not be totally reliable.
The paper sheds some light on the impact of this syndrome in the developing economies of Western Asia.
