Dealing with Dutch Disease
This note looks at so-called Dutch disease, a phenomenon reflecting changes in the structure of production in the wake of a favorable shock (such as a large natural resource discovery, a rise in the international price of an exportable commodity, o...
| Main Authors: | , , |
|---|---|
| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2010/06/12365761/dealing-dutch-disease http://hdl.handle.net/10986/10174 |
| Summary: | This note looks at so-called Dutch
disease, a phenomenon reflecting changes in the structure of
production in the wake of a favorable shock (such as a large
natural resource discovery, a rise in the international
price of an exportable commodity, or the presence of
sustained aid or capital inflows). Where the natural
resources discovered are oil or minerals, a contraction or
stagnation of manufacturing and agriculture could accompany
the positive effects of the shock, according to the theory.
The note considers channels through which such natural
resource wealth can affect the economy. It also focuses on
the development implications of Dutch disease, particularly
the potential negative effects related to productivity
dynamics and volatility; and concludes with a summary of
possible policy responses, including the mix of fiscal,
exchange rate, and structural reform policies. |
|---|