Temporal causality and the dynamics of democracy, emigration and real income in Fiji

Abstract

This study is the first to explore temporal causality between democracy, emigration and real income in Fiji within a multivariate cointegration model. We find three long run relationships between democracy, emigration and real income. In the long run there is evidence that migration and democracy Granger cause real GDP in Fiji; real GDP and democracy Granger cause migration from Fiji and that real GDP and migration Granger cause democracy in Fiji. In the short run we find unidirectional Granger causality running from migration to real GDP and from democracy to real GDP, but neutrality between democracy and migration in the short run. We also extend the analysis to examine the degree of exogeneity of the variables beyond the sample period through considering the decomposition of variance and impulse response functions.

Keywords:

• Fiji
• democracy
• migration
• cointegration
• causality

Notes

We are grateful to Hashem Pesaran and Yongcheol Shin for answering questions relating to the critical values for the ECM cointegration test and for sharing the GAUSS codes they used to produce the original set of critical values, as reported in Pesaran et al. (2001).

‘Fiji emigration high since 2002 coup’, http://www.flp.org.fj/n030110a.htm; ‘Emigration continues to rise’, Daily Post (Suva), 11 June 2003.

‘Fiji faces “major brain drain” as citizens apply for US residency’, Fijilive website, Suva, 27 July 2002. Text reproduced in BBC Asia Pacific Monitoring, 23 August 2002.

‘Fiji emigration high since 2002 coup’, above note 2.

‘Emigration said to be costing Fiji millions’, Fijilive website, Suva, 20 October 2002. Text reproduced in BBC Asia Pacific Monitoring, 20 October 2002.

For an analysis of the performance of private investment in Fiji, see Narayan (2004).

A similar conclusion is reached in Narayan & Narayan (2004a,b,2005) where the authors examine Fiji’s export and import performance, respectively.

‘Nurse exodus’, Daily Post (Suva). 23 March 2003.