IDEAS home Printed from https://ideas.repec.org/a/mes/postke/v43y2020i2p298-316.html

Neutralizing the Dutch disease

Author

Listed:
  • Luiz Carlos Bresser-Pereira

Abstract

This paper discusses the economic policies required to neutralize the Dutch disease—a long-term overvaluation of a national currency originated in the export of commodities—and the political economy involved. The difficulty in addressing this major market failure is associated with two political problems: the natural resource curse, the generalized rent-seeking that often takes over a commodity-exporting country, and exchange rate populism, the practice of keeping the currency overvalued, to ensure the reelection of politicians. While the two political problems have cultural and institutional roots that make them resilient to change, this paper shows that there is a relatively simple policy—a variable export tax on the commodities—that will make the currency competitive and therefore make it possible for the manufacturing industry to flourish.

Suggested Citation

  • Luiz Carlos Bresser-Pereira, 2020. "Neutralizing the Dutch disease," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 43(2), pages 298-316, April.
    • Handle: RePEc:mes:postke:v:43:y:2020:i:2:p:298-316
    DOI: 10.1080/01603477.2020.1713004
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/01603477.2020.1713004
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/01603477.2020.1713004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Basil Oberholzer, 2021. "Managing commodity booms: Dutch disease and economic performance," PSL Quarterly Review, Economia civile, vol. 74(299), pages 307-323.
    2. 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.
    3. Middelanis Martin & Fritz Barbara & de Paula Luiz Fernando, 2025. "The Global South in the Energy Transition: A Framework for Industrial Policy Options to Avert “Greening Dependency”," Journal of Globalization and Development, De Gruyter, vol. 16(2), pages 159-187.
    4. Thomas Goda & Alejandro Torres Garc�a & Cristhian David Larrahondo Dominguez, 2021. "Sectoral real exchange rates and manufacturing exports: A case study of Latin America," Documentos de Trabajo de Valor Público 19286, Universidad EAFIT.
    5. Cunha, André Moreira & Lélis, Marcos Tadeu Caputi & Haines, Andrés Ernesto Ferrari & Franke, Luciane, 2023. "Exports of manufactured goods and structural change: Brazil in the face of Chinese competition," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 1-12.
    6. Gustavo Henrique Leite de Castro & Carlos R. Azzoni, 2025. "Importações e mudanças estruturais na indústria brasileira, 2003-2018: Uma análise de decomposição estrutural [Imports and structural changes in the Brazilian industry, 2003–2018: A structural decomposition analysis]," Revista Brasileira de Estudos Regionais e Urbanos, Associação Brasileira de Estudos Regionais e Urbanos (ABER), vol. 19(4), pages 559-585, October.
    7. Palazzo, Gabriel, 2024. "Real exchange rate and import substitution episodes: Evidence from a developing economy," World Development, Elsevier, vol. 184(C).
    8. Kristina V. Shvandar & Vsevolod Y. Cherkasov & Tatiana F. Burova, 2017. "Dutch Disease: Applying the Budget Rule and the Role of Structural Reforms," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 5, pages 20-32, October.
    9. Domenico Marino & Domenico Tebala, 2022. "Rural Areas and Well-Being in EU Countries + UK: A Taxonomy and a Cluster Analysis," Sustainability, MDPI, vol. 14(22), pages 1-15, November.
    10. Thomas Goda & Alejandro Torres García & Cristhian Larrahondo, 2024. "Real exchange rates and manufacturing exports in emerging economies: the role of sectoral heterogeneity and product complexity," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(3), pages 1057-1082, August.
    11. Bresser-Pereira, Luiz Carlos & Feijó, Carmem & Araújo, Eliane Cristina de, 2021. "Do liberal policy regimes condemn Latin America to quasi-stagnation?," Textos para discussão 541, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:43:y:2020:i:2:p:298-316. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MPKE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.