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Dutch disease and the oil boom and bust

Author

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  • Brock Smith

Abstract

This paper examines the impact of the oil price boom in the 1970s and the subsequent bust on non-oil economic activity in oil-dependent countries. During the boom, manufacturing exports and output increased significantly relative to non-oil countries. These measures decreased gradually during the bust and subsequent period of low prices, displaying a positive relationship with oil prices. However, exports of agricultural products sharply decreased during the boom. Imports of all types of goods displayed strong pro-cyclicality with respect to oil prices. The results suggest that increased local demand and investment spillovers from the windfall resulted in increased manufacturing activity.

Suggested Citation

  • Brock Smith, 2019. "Dutch disease and the oil boom and bust," Canadian Journal of Economics, Canadian Economics Association, vol. 52(2), pages 584-623, May.
    • Handle: RePEc:cje:issued:v:52:y:2019:i:2:p:584-623
    DOI: 10.1111/caje.12376
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    Cited by:

    1. Ahmed Al-Sulaiti & Abdel Magid Hamouda & Hussein Al-Yafei & Galal M. Abdella, 2024. "Innovation-Based Strategic Roadmap for Economic Sustainability and Diversity in Hydrocarbon-Driven Economies: The Qatar Perspective," Sustainability, MDPI, vol. 16(9), pages 1-25, April.
    2. Nouf Alsharif & Sambit Bhattacharyya, 2024. "Oil discovery, boom‐bust cycle and manufacturing slowdown: Evidence from a large industry level dataset," Review of Development Economics, Wiley Blackwell, vol. 28(2), pages 406-431, May.
    3. Navendradat Hardyal & Stephan Moonsammy & Devin Warner, 2024. "A systematic review of the effects and symptoms of the Dutch Disease globally: Lessons for Guyana," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(3), pages 5665-5688, March.
    4. Köse, Nezir & Ünal, Emre, 2021. "The effects of the oil price and oil price volatility on inflation in Turkey," Energy, Elsevier, vol. 226(C).
    5. Vatsa, Puneet & Hu, Baiding, 2021. "Intra-federal effects of oil prices: Evidence from Canada," Resources Policy, Elsevier, vol. 74(C).
    6. Saleh Ghavidel Doostkouei & Mir Hossein Mousavi & Mohammad Sharif Karimi, 2024. "Do oil sanctions reduce Dutch disease phenomenon? A quasi-experimental approach evidence from Iran," International Economics and Economic Policy, Springer, vol. 21(2), pages 385-410, May.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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