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The Dutch disease and the technological gap

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  • Cherif, Reda

Abstract

I present a theory explaining why less technologically advanced countries could be more vulnerable to the Dutch disease. In a bilateral trade model with monopolistic competition and increasing returns to scale, the extent of the crowding-out in the tradable sector depends positively on an interaction between the amount of revenues from natural resources’ exports and the productivity gap vis-à-vis the trade partners. With learning-by-doing, the mechanism is self-reinforcing leading to a productivity divergence pattern. The predictions of the model are consistent with cross-country empirical evidence.

Suggested Citation

  • Cherif, Reda, 2013. "The Dutch disease and the technological gap," Journal of Development Economics, Elsevier, vol. 101(C), pages 248-255.
  • Handle: RePEc:eee:deveco:v:101:y:2013:i:c:p:248-255
    DOI: 10.1016/j.jdeveco.2012.10.010
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    References listed on IDEAS

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    Cited by:

    1. repec:eme:jespps:jes-05-2017-0114 is not listed on IDEAS
    2. Gerelmaa, Lkhagva & Kotani, Koji, 2016. "Further investigation of natural resources and economic growth: Do natural resources depress economic growth?," Resources Policy, Elsevier, vol. 50(C), pages 312-321.
    3. Akhmetov, Almaz, 2017. "Testing the Presence of the Dutch Disease in Kazakhstan," MPRA Paper 77936, University Library of Munich, Germany.
    4. Reda Cherif & Fuad Hasanov, 2014. "Soaring of the Gulf Falcons; Diversification in the GCC Oil Exporters in Seven Propositions," IMF Working Papers 14/177, International Monetary Fund.
    5. Jean-Pierre Allegret & Mohamed Benkhodja & Tovonony Razafindrabe, 2018. "Monetary Policy, Oil Stabilization Fund and the Dutch Disease," Working Papers hal-01796312, HAL.
    6. Gry Oystenstad & Wessel Vermeulen, 2015. "The Impact of Windfalls: Firm selection, trade and welfare," OxCarre Working Papers 162, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    7. Parcero, Osiris J. & Papyrakis, Elissaios, 2016. "Income inequality and the oil resource curse," Resource and Energy Economics, Elsevier, vol. 45(C), pages 159-177.

    More about this item

    Keywords

    Models of trade with imperfect competition and scale economies; Dutch disease;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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