The `Dutch Disease': A Disease After All?

Wijnbergen, Sweder van

doi:10.2307/2232214

Cited by 551 publications

(239 citation statements)

References 13 publications

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“…One popular answer is that the traded sector is the engine of growth and benefits most from learning by doing and other positive externalities, hence non-resource export sectors temporarily hit by worsening competitiveness are unable to fully recover when resources run out. This can be demonstrated in a two-period, two-good Salter-Swan model where learning by doing is captured by future productivity of the traded sector increasing with current production of traded goods (van Wijnbergen, 1984a) or with cumulative experience (Krugman, 1987). 5 If manufacturing rather than agriculture enjoys learning by doing and the income elasticity of demand for agricultural goods is less than unity, shifting from manufacturing towards agriculture curbs growth in an open economy (Matsuyuma, 1992).…”

Section: Temporary Loss In Learning By Doing Curbs Economic Growthmentioning

confidence: 99%

Natural Resources: Curse or Blessing?

Ploeg

2011

Journal of Economic Literature

1,372

177

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract Are natural resources a "curse" or a "blessing"? The empirical evidence suggests either outcome is possible. The paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources. These include that a resource bonanza induces appreciation of the real exchange rate, deindustrialization and bad growth prospects, and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law, corruption, presidential democracies, and underdeveloped financial systems. Another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad, induces corruption especially in non-democratic countries, and keeps in place bad policies. Finally, resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets. The survey also offers some welfare-based fiscal rules for harnessing resource windfalls in developed and developing economies. Terms of use: Documents inJEL-Code: C12, C13, E01, F43, K42, O41, Q30.

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Section: Temporary Loss In Learning By Doing Curbs Economic Growthmentioning

confidence: 99%

Natural Resources: Curse or Blessing?

Ploeg

2011

Journal of Economic Literature

1,372

177

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“…There is a substantial theoretical literature on the Dutch disease, see, for instance Bruno and Sachs (1982), Corden and Neary (1982), Eastwood and Venables (1982), Corden (1984), Van Wijnbergen (1984) and Neary and van Wijnbergen (1984). The general finding in most of these papers is that there is an inverse long run relationship between increased exploitation of natural resources and growth in the manufacturing sector, similar to what the Netherlands experienced in the 1960s.…”

Section: Macroeconomic Impacts Of An Energy Discoverymentioning

confidence: 98%

Boom or Gloom? Examining the Dutch Disease in a Two-Speed Economy

Bjjrnland

Thorsrud

2013

SSRN Journal

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Traditional studies of the Dutch disease do not typically account for productivity spillovers between the booming energy sector and non-oil sectors. This study identifies and quantifies these spillovers using a Bayesian Dynamic Factor Model (BDFM). The model allows for resource movements and spending effects through a large panel of variables at the sectoral level, while also identifying disturbances to the real oil price, global demand and non-oil activity. Using Norway as a representative case study, we find that a booming energy sector has substantial spillover effects on the non-oil sectors. Furthermore, windfall gains due to changes in the real oil price also stimulates the economy, but primarily if the oil price increase is caused by global demand. Oil price increases due to, say, supply disruptions, while stimulating activity in the technologically intense service sectors and boosting government spending, have small spillover effects on the rest of the economy, primarily because of reduced cost competitiveness. Yet, there is no evidence of Dutch disease. Instead, we find evidence of a two-speed economy, with non-tradables growing at a much faster pace than tradables. Our results suggest that traditional Dutch disease models with a fixed capital stock and exogenous labor supply do not provide a convincing explanation for how petroleum wealth affects a resource rich economy when there are productivity spillovers between sectors.

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“…Consistent with existing specifications in the Dutch disease literature learning by doing is external and modeled through the sectoral labor shares. The early contributions by van Wijnbergen (1984) and Krugman (1987) restrict learning effects to the tradable sector. In the theoretical model of Sachs and Warner (1995) LBD is still generated in tradables, but with perfect spillovers to nontradables.…”

Section: The Dynamic General Equilibrium Model With Endogenous Producmentioning

confidence: 99%

“…In an early contribution van Wijnbergen (1984) relates productivity growth to learning by doing in tradables, and investigates the impact of a resource boom in a two-period model. The demand-driven real exchange rate appreciation in period 1 is followed by real depreciation in the second period due to productivity effects.…”

Section: Introductionmentioning

confidence: 99%

Resource boom, productivity growth and real exchange rate dynamics — A dynamic general equilibrium analysis of South Africa

Stokke¹

2008

Economic Modelling

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We study the impact of a natural resource boom on structural change and real exchange rate dynamics, taking into account the indirect effect via relative sectoral productivity changes.Our contribution relative to the Dutch disease literature is threefold. First, the productivity specification is extended from simple learning by doing to include trade barriers and technology gap dynamics, consistent with the modern understanding of productivity growth.Second, we offer a dynamic general equilibrium model with imperfect substitution between domestic and foreign goods. Third, the model is applied to South Africa and analyzes the macroeconomic impact of the gold price increase in the 1970s. Political pressure for rapid domestic spending after a surge in resource rents tends to generate myopic government behavior with unsustainable high consumption spending. Such fiscal response to higher resource income is captured by the model specification. Numerical simulations show how the resource boom can help explain the structural change and real exchange rate path observed in South Africa. Due to productivity effects the initial real appreciation is followed by gradual depreciation of the real exchange rate.JEL no: O33, O41, O55, Q33.

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The `Dutch Disease': A Disease After All?

Cited by 551 publications

References 13 publications

Natural Resources: Curse or Blessing?

Natural Resources: Curse or Blessing?

Boom or Gloom? Examining the Dutch Disease in a Two-Speed Economy

Resource boom, productivity growth and real exchange rate dynamics — A dynamic general equilibrium analysis of South Africa

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