Searching for a New Theory of Dutch disease after Corden and Neary

In three articles (1982 and 1984), Max Corden and Peter Neary exhibited the theory of Dutch disease which aroused vast interest across the world until today. The theory about the consequence of a commodity boom is based on neoclassical and partly monetarist grounds. This article reconsiders this theory thoroughly. It is static, formulated in terms of a barter economy, does not integrate money and currencies, refutes anything like a “disease” in the sense of a long-standing handicap of an economy and is not in line with the stylized facts of commodity cycles. It suffers under a set of too restrictive assumptions. An alternative theory is proposed here which uses parts of Corden and Neary’s theory and goes far beyond in order to integrate commodity trade in theories of economic development in resource-rich countries and repercussions on the world economy. It shows that in some − not all − resource-rich countries indeed a long-standing structural deformation can occur that is difficult to cure. JEL Classification: B31; E32; F11; F31; O11; Q02; Q43.