Dutch disease

decline of the manufacturing sector in the NetherlandsThe Dutch Disease
In economics, the Dutch disease is the apparent causal relationship between the increase in the economic development of a specific sector (for example natural resources) and a decline in other sectors (like the manufacturing sector or agriculture).wikipedia
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Max Corden

W. Max CordenWarner Max CordenW.M. Corden
The classic economic model describing Dutch disease was developed by the economists W. Max Corden and J. Peter Neary in 1982.
He is mostly known for his work on the theory of trade protection, including the development of the dutch disease model of international trade.

Natural resource

natural resourcesresourcesmineral resources
In economics, the Dutch disease is the apparent causal relationship between the increase in the economic development of a specific sector (for example natural resources) and a decline in other sectors (like the manufacturing sector or agriculture).
Natural resources can add substantial amounts to a country's wealth, however, a sudden inflow of money caused by a resource boom can create social problems including inflation harming other industries ("Dutch disease") and corruption, leading to inequality and underdevelopment, this is known as the "resource curse".

Netherlands

DutchThe NetherlandsHolland
The term was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of the large Groningen natural gas field in 1959.
However, the unforeseen consequences of the country's huge energy wealth impacted the competitiveness of other sectors of the economy, leading to the theory of Dutch disease.

Heckscher–Ohlin model

Heckscher-Ohlin modelHecksher-Ohlincase of the missing trade
In a model of international trade based on resource endowments as the Heckscher–Ohlin/Heckscher–Ohlin-Vanek, the Dutch disease can be explained by the Rybczynski Theorem.

Raw material

raw materialsfeedstockmaterial
Using data on 118 countries over the period 1970–2007, a study by economists at the University of Cambridge provides evidence that the Dutch disease does not operate in primary commodity-abundant countries.
Places with plentiful raw materials and little economic development often show a phenomenon, known as "Dutch disease" or the "resource curse, which occurs when the economy of a country is mainly based upon its exports because of its method of governance. An example of this is the Democratic Republic of The Congo.

Groningen gas field

Groningengas winning in GroningenGroningen natural gas field
The term was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of the large Groningen natural gas field in 1959.
* Dutch disease

J. Peter Neary

The classic economic model describing Dutch disease was developed by the economists W. Max Corden and J. Peter Neary in 1982.
Neary, together with W. Max Corden, in 1982 developed the classic economic model describing Dutch disease.

Rybczynski theorem

Rybczynski effect
In a model of international trade based on resource endowments as the Heckscher–Ohlin/Heckscher–Ohlin-Vanek, the Dutch disease can be explained by the Rybczynski Theorem.

Azerbaijan

Republic of AzerbaijanAzerbaijan RepublicAZE
Azerbaijan shows some signs of the so-called "Dutch disease" because of its fast-growing energy sector, which causes inflation and makes non-energy exports more expensive.

Economics

economiceconomisteconomic theory
In economics, the Dutch disease is the apparent causal relationship between the increase in the economic development of a specific sector (for example natural resources) and a decline in other sectors (like the manufacturing sector or agriculture).

Secondary sector of the economy

secondary sectorindustryindustrial sector
In economics, the Dutch disease is the apparent causal relationship between the increase in the economic development of a specific sector (for example natural resources) and a decline in other sectors (like the manufacturing sector or agriculture).

Agriculture

farmingagriculturalAgriculturist
In economics, the Dutch disease is the apparent causal relationship between the increase in the economic development of a specific sector (for example natural resources) and a decline in other sectors (like the manufacturing sector or agriculture). The lagging sector is usually manufacturing or agriculture.

Exchange rate

exchange ratesreal exchange rateforeign exchange rate
The putative mechanism is that as revenues increase in the growing sector (or inflows of foreign aid), the given nation's currency becomes stronger (appreciates) compared to currencies of other nations (manifest in an exchange rate).

Competition

competitorcompetitionscompetitive
This results in the nation's other exports becoming more expensive for other countries to buy, and imports becoming cheaper, making those sectors less competitive.

Currency

currenciesforeign currencycoinage
While it most often refers to natural resource discovery, it can also refer to "any development that results in a large inflow of foreign currency, including a sharp surge in natural resource prices, foreign assistance, and foreign direct investment".

Aid

foreign aidinternational aidfood aid
While it most often refers to natural resource discovery, it can also refer to "any development that results in a large inflow of foreign currency, including a sharp surge in natural resource prices, foreign assistance, and foreign direct investment".

Foreign direct investment

foreign investmentFDIforeign investments
While it most often refers to natural resource discovery, it can also refer to "any development that results in a large inflow of foreign currency, including a sharp surge in natural resource prices, foreign assistance, and foreign direct investment".

The Economist

EconomistEconomist magazineLondon Economist
The term was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of the large Groningen natural gas field in 1959.

Economic model

modelmodelseconomic models
The classic economic model describing Dutch disease was developed by the economists W. Max Corden and J. Peter Neary in 1982.

Service (economics)

servicesserviceBusiness Services
In the model, there is a non-tradable sector (which includes services) and two tradable sectors: the booming sector, and the lagging (or non-booming) tradable sector.

Tradable sector

non-tradable sectortradabletradable economy
In the model, there is a non-tradable sector (which includes services) and two tradable sectors: the booming sector, and the lagging (or non-booming) tradable sector.

Manufacturing

manufacturermanufacturemanufacturers
The lagging sector is usually manufacturing or agriculture.