Dutch Disease
Version 1.0.0 · Updated 2026-07-30
CORE DEFINITION
Refers to a phenomenon where a country's surge in exports of a certain primary product (such as oil or natural gas) leads to appreciation of its currency, thereby weakening the international competitiveness of other export industries (especially manufacturing), ultimately resulting in a monolithic economic structure and deindustrialization.
SCAFFOLDING EFFECT
Reduce cognitive load
Early warning for resource curse. It explains why resource-rich countries may fall into development traps. In resource development and industrial policy formulation, it reminds to establish sovereign wealth funds, invest in diversification, and upgrade technology to avoid over-reliance on resource exports.
Anchor fast decisions
A country's export boom of a certain resource (such as oil and gas) pushes up the exchange rate, suppressing the competitiveness of other sectors (manufacturing, agriculture), leading to a monolithic economic structure and increased volatility.
MINIMUM ACTION
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Source support: Explicit
- en.wikipedia.orghttps://en.wikipedia.org/wiki/Dutch_diseaseverified
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