Talk:Dutch disease

This article has been mentioned by a media organization:

Bob McTeer (2012-07-01). "The Euro's Dutch Disease". Forbes. Retrieved 2012-07-04. According to Wikipedia, 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."

Rybczynski Theorem[edit]

This article would greatly benefit from an expansion of how the Dutch disease relates to the Rybczynski Theorem. Currently, only has a short sentence of their relationship. Further explanation will provide a more comprehensive overview of the Dutch disease. 1993ke (talk) 15:28, 18 November 2014 (UTC)[reply]

Issues with the chart[edit]

The chart with the DEM-NLG exchange rate is labelled incorrectly. The way it is labelled today indicates that the line gives the amount of Dutch florins corresponding to one deutschmark, or, in other words, the amount (in florins) it takes to buy one deutschmark. This is given by the chart as ~0.90 before 1970 and ~1.10 in 1980. This would actually constitute a depreciation of the florin: It takes more florins to buy a deutschmark. The effect described in the text includes, however, an appreciation of the domestic currency (i.e., the florin in this case). I suppose the information the chart gives is in fact the amount in deutschmarks a florin can buy ("1 NLG in DEM"), which would indicate an appreciation. SchnitteUK (talk) 17:22, 25 November 2012 (UTC)[reply]

Also, the Dutch currency hasn't been called the florin for centuries. Before the euro they used the Gulden or Guilder. — Preceding unsigned comment added by 87.210.254.133 (talk) 14:16, 19 January 2013 (UTC)[reply]

The chart is labelled correctly (easily verified by going to a site like http://fxtop.com/, which contains historical exchange rates), it just does not support the Dutch disease phenomenon. The uptick in September/October 1969 of the ratio was caused by a revaluation of the DEM, and has nothing to do with the NLG, which indeed stands for Netherlands Guilder. I will remove the chart as it is not helpful for this article. Wimvdam (talk) 20:04, 4 February 2013 (UTC)[reply]

I simply don't understand[edit]

I simply don't understand this sentence in paragraph 1: The Dutch Disease becomes an actual disease if there is something special to the activities resource extraction crowds out, [...]. Could someone please clarify? Asav

I agree, it was rather hard to parse. I've added "that" in the apprporiate place. Hairy Dude 04:27, 27 January 2006 (UTC)[reply]

That still doesn't make any sense to me, especially since an economic phenomenon cannot become an "actual disease" unless it's a microbe. I've taken it out and shot it, but could somebody explain what it was trying to say and reword it? Jpatokal 09:38, 8 February 2006 (UTC)[reply]

Two of the paragraphs I have deleted ("In the theoretical economics literature, three channels of causation ...'" and "Second, natural resource ownership exposes ...") seem to come from [1] or [2] by Xavier-Sala-i-Martin (Columbia University) and Arvind Subramanian (International Monetary Fund). Much of the rest seems to come from [3] by Jean-Philippe Stijns (University of California at Berkeley) --Henrygb 16:20, 2 Feb 2005 (UTC)

I'm not well up enough on it to add the info myself, but doesn't the effect of silver on the Spanish imperial economy deserve a mention here?

Hello all -

I don't understand the "effects" Paragraph... especially "This is because technological growth is smaller in the booming sector and the non-tradable sector than the non-booming tradable sector.[5] " Is this up for a re-write? Just trying to help...

Found this article in The Economist that explains the effects a bit more clearly: http://www.economist.com/node/16964094

Any objections? Manzuetak (talk) 21:09, 10 November 2014 (UTC)[reply]

Prices[edit]

I'm no economist, but is this the cause of Norway's well-known high prices (compared to elsewhere in Europe) for everyday goods? And if not, what is?

No, it's the other way around. The chain of effects here is 1) They find oil and the economy is strengthened radically 2) The Norwegian currency gets stronger (=high prices) 3) "Dutch disease", due to the strong Norwegian currency, demand for other Norwegian exports drop since they become more expensive. So "Dutch disease" (if you believe the theory) is caused by the strong currency, not vice-versa. --BluePlatypus 08:09, 16 December 2005 (UTC)[reply]

Huh, I beg to differ: strong currency => lower price of imports. Niczar (talk) 23:54, 15 December 2007 (UTC)[reply]

RM merger tags[edit]

I'm removing the merger tags from this article. Dutch disease is NOT the same thing as the resource curse. I think the merger is the result of confusion of the terms and will only cause more confusion. Both have to do with resources creating problems, but dutch disease is usually a sudden shock to the economy caused by resource exports raising currency values. The resource curse is the paradoxical lack of growth in countries with strong natural resources. Dutch disease is one mechanism which might contribute to this lack of growth. I think this article does a good job of illustrating the differences. Dutch disease is listed as one of three explanations for the resource curse.--Bkwillwm 17:56, 10 March 2006 (UTC)[reply]

Article revamp[edit]

I'm looking at trying to expand this page, making sections for: the economic explanation for Dutch Disease, the disagreements with Dutch disease, examples of where it occurs, and policy solutions, such as sterilization of revenues (as in Norwegian example). I think that should be a rough outline on how the article should go. I'm new to all this, so this all seems a little daunting. So, any comments or help would be appreciated. --Geoff

I've deleted a few sentences that referred to uncited claims. Also, since we are trying to differentiate Dutch Disease and Resource Curse, I deleted the part of the Norwegian example that shows how they are trying to avoid the resource curse. The Petroleum Fund of Norway tries to avoid Dutch disease by sterilizing the revenues overseas. If you have any questions on anything I do, just let me know. --Geoff 01:54, 12 March 2006 (UTC)[reply]

I started making a list of Dutch Disease cases, feel free to add to it. However, since it is often difficult to determine whether DD is present, and is often the subject of disagreements, I think it would be best to have citations to show that there is good reason to have them on the list. That is also why I put "possible" on the list title, so as to lower the burden of proof required. I'll be trying to add to the list, too. I'm also going to get started, trying to write a section on the economic explanation of this. Alright. --Geoff 00:25, 13 March 2006 (UTC)[reply]

Okay, I've added a bit on the economic model of Dutch disease. It is definitely not in its final state yet. It needs a graph, and better explanations, more clearly written. I just wanted to get something up, maybe get some comments on it. Alrighty? --Geoff 05:33, 13 March 2006 (UTC)[reply]

Okay! I've started the section on remedies. Certainly not finished. More oil funds ought to be listed; I'm sure there are some Middle Eastern ones. I'm not sure if I want to talk more about these funds here, or if they would be more fitting on the resource curse article, since the scope of these funds is much broader than Dutch disease. Another topic to be addressed here is the relationship between Dutch Disease and resource curse. Dutch disease is a rather ambiguous term. Right now, we've defined it to its simplest definitation, but people often take a broader definition, bringing in other related resource curse topics. I'm not quite sure how we should address this. Enough for now. --Geoff 06:33, 14 March 2006 (UTC)[reply]

I've rewritten the intro, made it more concise, since more of the content is being discussed in each of the sections. It still needs some work, but I'm not sure of the best way to sum up Dutch disease for the first couple introduction sentences. If anyone would help with the writing of it, have at it.

This article is still very poorly written.

Is there any consensus that the political factors should mostly be moved to resource curse (especially the ones mentioned in the introduction)? Dutch disease describes a specific economic process; strictly speaking, it is an effect that will occur no matter how well-governed and democratic the country is -- just look at the country it's named after. The Netherlands didn't have trouble because it suddenly turned into a corrupt petro-dictatorship once gas was discovered. Of course, the political problems which often result from resource abundance can also hurt economic performance, often in the same ways as Dutch disease (discouraging non-resource exports), but through an entirely different mechanism. THIS process is what should be described at resource curse. If nobody disagrees, I will make some bold edits to this end, including clearly explaining the difference between the two terms. Geoff, I think this is the best way of reconciling the broad/narrow definitions -- it would also be helpful to hunt down pages that link here and switch the link to resource curse if that is the aspect being discussed.

As for oil funds, they should be mentioned in *both* articles because they typically have a dual purpose: one being to 'sanitize' oil money by sequestering it offshore to prevent Dutch disease, and the other being to keep it out of the hands of greedy politicians (as per resource curse). Stuffisthings (talk) 15:27, 15 July 2010 (UTC)[reply]

Venezuela[edit]

Would Venezuela be a good example of Dutch Disease? Is it a single event, or can it be long term. If it's long term, I'm thinking it would fit. If it's a single event, maybe not so much. I'm curious, thanks. 72.208.38.164 17:52, 12 May 2007 (UTC)[reply]

do you have sources for this analysis? The DD implies that there is a crash when the ressource is exhausted; AFAICT there is still plenty of oil in Venezuela, some of it (Ornioco basin) yet largely untapped as it was unprofitable until prices rose sufficiently. Niczar (talk) 20:46, 10 December 2007 (UTC)[reply]

Iran and pistachios[edit]

Reference to Dutch disease in news article Iran faces U.S. challenge in "pistachio war" quoting "...a board member of Iran's Pistachio Association...". So here is a comment by someone self-identifying the industry and country affected. (BTW: quite lovely to find the definition here at WP) Shenme (talk) 05:03, 9 October 2008 (UTC)[reply]

National debt?[edit]

Does an increase of national debt held by foreign countries, or an increased foreign trade deficit, or the manipulation of foreign currency to keep its exchange rate low cause Dutch disease? Specifically, can the current weak U.S. manufacturing sector be blamed on "Dutch disease" arising from the $1.5 trillion debt to China? Wnt (talk) 21:21, 16 October 2008 (UTC)[reply]

in short? yes. american company's have outsourced almost all labor to china/south-america and thus the wealth is relocated towards china/south america, and as america relied too much on oil reserves the debt keeps increasing and increasing till the final financial collapse (if america doesn't socialize (be more socially minded *not the american definition of social*, jobs won't ever return) Markthemac (talk) 18:58, 10 May 2010 (UTC)[reply]

america has a pretty massive problem of highly-skilled/educated people leaving america to more socially-minded countries. all i am saying to america as a country is: be nice! care for your people, don't exploit poor neighbors, don't fight against the poor be humain and create low/mid/high jobs with benefits and people will create sustainable prosperity (that's all why terrorists exist, as it's not rocket science to figure them out) Markthemac (talk) 18:58, 10 May 2010 (UTC)[reply]

No. Dutch disease is caused by very large inflows of foreign currency revenue for a specific resource, causing the domestic currency to appreciate and other exports to become uneconomic. The United States is A) not a net exporter B) does not overwhelming export one thing and C) mainly exports services and high-value-added manufactured goods, not resources. Also, because of our currency's unique status it would be almost impossible for a flood of foreign currency to affect our economy in this way; even if we suddenly became a major oil exporter, for example, oil is priced *in dollars*. Interestingly, Alaska and Arizona have natural resource stabilization funds, but these are intended to ensure consistent government revenue and save for the future, not 'sanitize' large inflows of foreign currency.

It could be argued, however, that the overvalued dollar IS affecting US manufacturing competitiveness -- this has partly to do with the demand for dollars in oil and other resource transactions, but primarily because of demand for dollars and US assets as reserve currency/ultra-safe investments. A large drop in the dollar would boost US manufacturing, and could eventually lead to higher growth; it would also immediately make imports (e.g. iPhones, laptops, gasoline, clothing, essentially everything sold at Wal-Mart) much more expensive, reducing real wages, and would likely lead to a government default. For an idea of what this would look like to the average citizen, see Russian financial crisis of 1998. In that case a 20-30% drop in real incomes resulted in a decade of 5-7% growth (and 15% inflation). This is really far out of the realm of Dutch disease, though. Stuffisthings (talk) 16:06, 15 July 2010 (UTC)[reply]

Proposal[edit]

I find the page lacking in a basic area - it covers in detail which other countries may have been victims of the Dutch Disease, but doesn't give much any information on what exactly was the economic disease in the Netherlands. There's no mention of statistics for manufacturing industry output and manufacturing exports before and after 1959. Similarly, there are no statistics for exchange rates. Could someone with access to the data or the original economics paper add some of the missing detail? Scartboy (talk) 02:16, 27 November 2011 (UTC)[reply]

This is exactly what I thought, and I'm reading this a year and a half after you posted. Hopefully someone who is knowledgeable on the subject reads this talk page and can contribute the necessary information. —Ynhockey ^(Talk) 00:13, 17 May 2013 (UTC)[reply]

tech[edit]

competitive manufacturing industries cannot return as quickly or as easily as they left. This is because technological growth is smaller in the booming sector and the non-tradable sector than the non-booming tradable sector.[5] Since there has been less technological growth in the economy relative to other countries, its comparative advantage in non-booming tradable goods will have shrunk

What does the article mean by tech growth being largest in the country's non-booming tradable sector? Isn't it the other way around (correlating with free investment, to the extent that relative tech growth even is quantifiable)? Or is it referring to the development in overseas competition comparatively to that of each respective local industry? Cesiumfrog (talk) 00:51, 28 June 2012 (UTC)[reply]

adverse selection[edit]

It seems to me that the the growing industry attracts talent from other industries, leaving the non-growth industries with an adversely selected pool of labor. Yet, there is no mention of adverse selection in the article. Is Dutch disease a form of adverse selection or not? If not, why not? The terms "adverse consequence" and "adverse outcomes" are frequently used in papers on the topic. Shouldn't adverse selection be discussed in the article either way? I.e., to support it or to differentiate it. — Preceding unsigned comment added by 68.37.24.220 (talk) 03:07, 4 November 2015 (UTC)[reply]

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Examples from the Middle East[edit]

I don't know why there are no examples from the Middle East in the article. I think they would represent the most obvious examples, where many countries are depending almost entirely on oil and natural gas exports, lost all their pre-oil economic sectors, and face chronic difficulties in diversifying their economies now.--138.75.40.159 (talk) 14:18, 22 July 2021 (UTC)[reply]

Examples[edit]

why isn't the eponymous ("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 example given in the list of examples? 199.127.133.181 (talk) 19:26, 4 November 2023 (UTC)[reply]