Dutch Disease

By Deane Barker • •

This is an economic phenomenon where a drastic improvement in one part of country’s economy leads to a decline in other parts.

Specifically, it refers to the rise in the valuation of the Dutch guilder when a large oil field was discovered in the late 1950s. This caused exports to be more expensive, leading to a decline in manufacturing.

Since then, it’s been used to describe dozens of similar situations. However, it’s most often used in the context of large natural resource (e.g. oil) discoveries. It becomes especially problematic if the natural resource eventually runs out, leaving the economy in worse condition than before the discovery.

Why I Looked It Up

I don’t remember. I read about it somewhere, but didn’t note the reference.

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