Dutch Disease


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Dutch Disease

The phenomenon in which the manufacturing sector of a country declines when it begins to make significant profits from the exploitation of a natural resource. For example, if a country suddenly discovers oil and sells it on the international market, it may see a decline in the competitiveness of its manufacturing companies. It is thought that the Dutch disease comes from the fact that the sale of the natural resource leads to a stronger currency, which makes the country's exports more expensive and causes scaling down in manufacturing.
References in periodicals archive ?
However, the Dutch's management of their natural resource led to the detriment of other sectors of their economy, hence what has come to be known as the 'Dutch Disease'.
This, in turn, will lead to ownership and acceptance of oil production activities, which will help the nation avoid the oil curse and Dutch disease, and instead enable it to reap the benefits of being an oil-producing country.
While not worried about whether parliament approves a Hydrocarbons Fund far from the Norwegian model, fear of the "Dutch disease" keeps the Fiscal council on its toes.
Holland realized the challenge, which became known as the Dutch disease, and learned a lot from it.
The term Dutch Disease was coined by "The Economist" 20 years after large gas reserves were discovered in the Netherlands.
With a relatively sustained period of policies that have attracted both official and private capital inflows to the region, the challenge to avoid the Dutch disease syndrome has also further complicated exchange rate management (Younger 1992 and Corden and Neary 1982).
It added that "the continuation and increase of the economy's dependence on these factors could inevitably cause the effects of the 'Dutch disease,' i.e.
This is the reason some economists even call migration as the country's 'Dutch disease'.
This is where the danger lies as it could allow the dynamics of reform to falter, forcing the country to suffer for longer from the Dutch disease linked to an overwhelming dependence on oil.
While aid may have the potential to cause Dutch Disease, this is not automatic in the way suggested by the critics of aid
A short, interesting section on the resource curse, or "Dutch disease," is also offered.
Booming sector and Dutch disease economics: Survey and consolidation.