Dutch disease is an economic phenomenon where a boom in one sector, often natural resources like oil or gas, leads to decline in other sectors such as manufacturing or agriculture. Coined in 1977 by The Economist, it refers to the Netherlands' post-1959 Groningen gas field discovery, where export revenues strengthened the currency, making non-resource exports less competitive globally.
The core mechanism: Increased export income appreciates the currency, raising import costs and crowding out other industries via higher wages and spending. It can cause deindustrialization, reduced diversification, and long-term vulnerability. Mitigation involves saving resource windfalls or investing in non-booming sectors.
Dutch disease is an economic phenomenon where a boom in one sector, often natural resources like oil or gas, leads to decline in other sectors such as manufacturing or agriculture. Coined in 1977 by The Economist, it refers to the Netherlands' post-1959 Groningen gas field discovery, where export revenues strengthened the currency, making non-resource exports less competitive globally.
The core mechanism: Increased export income appreciates the currency, raising import costs and crowding out other industries via higher wages and spending. It can cause deindustrialization, reduced diversification, and long-term vulnerability. Mitigation involves saving resource windfalls or investing in non-booming sectors.
For more: Dutch disease - Wikipedia.
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