Dutch Disease

In economics, the Dutch disease is a concept that explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector. The mechanism is that an increase in revenues from natural resources (or inflows of foreign aid) will make a given nation's currency stronger compared to that of other nations (manifest in an exchange rate), resulting in the nation's other exports becoming more expensive for other countries to buy, making the manufacturing sector less competitive. 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 term was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of a large natural gas field in 1959.

Read more about Dutch Disease:  The "Core Model", Effects, Minimization, Diagnosis

Famous quotes containing the words dutch and/or disease:

    Paradise endangered: garden snakes and mice are appearing in the shadowy corners of Dutch Old Master paintings.
    Mason Cooley (b. 1927)

    Smoking ... is downright dangerous. Most people who smoke will eventually contract a fatal disease and die. But they don’t brag about it, do they? Most people who ski, play professional football or drive race cars, will not die—at least not in the act—and yet they are the ones with the glamorous images, the expensive equipment and the mythic proportions. Why this should be I cannot say, unless it is simply that the average American does not know a daredevil when he sees one.
    Fran Lebowitz (b. 1950)