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Neither Dutch nor disease?—natural resource booms in theory and empirics

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  • Grant Mark Nülle

    (Arizona Department of Revenue)

  • Graham A. Davis

    (Colorado School of Mines)

Abstract

For several decades, economists have endeavored to determine whether a sudden surge in mineral and energy extraction activity poses an albatross or boon to an economy. The “Dutch disease” version of the resource curse originates in a traditional model postulating that extensive mineral and energy production induces inter-sectoral adjustments among traded and non-traded industries and that these adjustments tend to crowd out traditional export industries such as manufacturing. This can be acutely detrimental to the long-run growth of an economy when the traditional industries produce positive learning by doing externalities. This chain of events is so frequently cited as being evident in resource-based economies that it has become stylized wisdom. This paper reviews whether modern theoretical models and empirical evidence actually support the Dutch disease. Overall, we find that the Dutch disease is by no means theoretically predicted or empirically evident within resource-based economies.

Suggested Citation

  • Grant Mark Nülle & Graham A. Davis, 2018. "Neither Dutch nor disease?—natural resource booms in theory and empirics," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 35-59, May.
  • Handle: RePEc:spr:minecn:v:31:y:2018:i:1:d:10.1007_s13563-018-0153-z
    DOI: 10.1007/s13563-018-0153-z
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