Dutch Disease

Negative consequences arising from large increases in a country's income. Dutch disease is primarily associated with a natural resource discovery, but it can result from any large increase in foreign currency, including foreign direct investment, foreign aid or a substantial increase in natural resource prices.

Dutch disease has two main effects:

1. A decrease in the price competitiveness, and thus the export, of the affected country's manufactured goods
2. An increase in imports

In the long run, both these factors can contribute to manufacturing jobs being moved to lower-cost countries. The end result is that non-resource industries are hurt by the increase in wealth generated by the resource-based industries.

The term "Dutch disease" originates from a crisis in the Netherlands in the 1960s that resulted from discoveries of vast natural gas deposits in the North Sea. The newfound wealth caused the Dutch guilder to rise, making exports of all non-oil products less competitive on the world market.

In the 1970s, the same economic condition occurred in Great Britain, when the price of oil quadrupled and it became economically viable to drill for North Sea Oil off the coast of Scotland. By the late 1970s, Britain had become a net exporter of oil; it had previously been a net importer. The pound soared in value, but the country fell into recession when British workers demanded higher wages and exports became uncompetitive.

Investment dictionary. . 2012.

Look at other dictionaries:

  • Dutch disease — This article is about the economic phenomenon. For the disease affecting elm trees, see Dutch elm disease. In economics, the Dutch disease is a concept that purportedly explains the apparent relationship between the increase in exploitation of… …   Wikipedia

  • Dutch disease — Maladie hollandaise La maladie hollandaise (ou mal hollandais, ou syndrome hollandais) est un phénomène économique qui relie exploitation de ressources naturelles et déclin de l industrie manufacturière locale. Inspiré du cas des Pays Bas des… …   Wikipédia en Français

  • Dutch Disease — Als Holländische Krankheit (Dutch disease) bezeichnet man ein makroökonomisches Paradoxon, gemäß dem es in erfolgreich exportierenden (und somit eigentlich prosperierenden) Volkswirtschaften über Wechselkursentwicklungen zu einem ökonomischen… …   Deutsch Wikipedia

  • Dutch disease — The deindustrialization of an economy as a result of the discovery of a natural resource, so named because it occurred in Holland after the discovery of North Sea gas. The discovery of such a resource lifts the value of the country s currency,… …   Big dictionary of business and management

  • Dutch disease — /ˈdʌtʃ dəziz/ (say duch duhzeez) noun Economics an economic pattern in which a resources boom which has led to a leap in mineral exports and a sharp appreciation in the exchange rate produces a contraction in the industrial sector because the… …   Australian English dictionary

  • Dutch profanity — can be divided into several categories. Often, the words used in profanity are based around various names for diseases. In many cases, these words have evolved into slang, and many euphemisms for diseases are in common use.[1] Additionally, a… …   Wikipedia

  • Disease in colonial America — was a very dangerous unknown entity with very few remedies at the beginning of Colonial America. Throughout Colonial America many diseases came, some deadly and others treatable but all had in common, that they were the first diseases that were… …   Wikipedia

  • Dutch language — Dutch Nederlands Pronunciation [ˈneːdərlɑnts] ( listen) …   Wikipedia

  • Dutch pacification campaign on Formosa — Date 1635–36 Location Southwestern Taiwan Result Decisive Dutch victory, increased Dutch area of control …   Wikipedia

  • Dutch elm disease — Dutch′ elm′ disease n. ppa a disease of elms characterized by wilting, yellowing, and falling of the leaves, caused by a fungus, Ceratostomella ulmi, transmitted by bark beetles • Etymology: 1920–25 …   From formal English to slang

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.